This is on top of Malaysia current pool of about 90,000 engineers. The goal is to boost Malaysia’s position in the global semiconductor market, currently valued at RM575.45 billion (S$174 billion). 

One of the talents driving this effort is Dr Salleh Ahmad, who recently returned to Malaysia after earning a degree in microelectronics at ESIEE Paris and working in France. Now, he is leading Weeroc’s operations at their new facility in Selangor’s Integrated Circuit (IC) Design Park as chief technology officer (CTO). This facility in Puchong is central to Malaysia’s plans to advance from traditional semiconductor services to high-value fabless manufacturing and IC design.

According to The Straits Times, Dr Salleh noted, “Malaysia is a good choice due to its bright industry prospects, government incentives, and the low cost of doing business.” The push for more engineers is driven by the country’s plan to double its chip sector output and market share by 2030.

Currently, Malaysia’s chip sector contributes 7% to global exports and aims to increase this to 15%, boosting its market value from RM575.45 billion to RM1.2 trillion. The strategy is built around three Rs: recruit, retain, and return—bringing in new engineers, keeping existing talent, and encouraging Malaysians working abroad to return home.

The newly opened Puchong chip design hub, touted as one of the largest in Southeast Asia, plays a crucial role in this strategy. It needs up to 400 local engineers, with 60 already hired. According to Ng Sze Han, Selangor’s state executive councillor for investment, the hub offers salaries up to RM6,000 for new graduates.

This is much higher than the national median of RM2,600 and surpasses the salaries in Selangor (RM2,900), Kuala Lumpur (RM3,900), and Penang (RM2,645). This is intended to attract and retain skilled engineers in Malaysia.

“Anchor tenant MaiStorage has established an office in the park. Five Malaysians who previously worked at Taiwan’s Hsinchu Technology Park have returned to lead and mentor local hires as qualified IC designers,” he noted.

Although in Taiwan and France, engineering graduates can earn up to RM9,000 and RM17,000 a month, they usually need a master’s degree. 

When asked about competing with countries like Singapore, Mr Ng said that Malaysia “can’t treat Singapore as a competitor” but rather as part of a larger supply chain. “Our cost of doing business is lower than Singapore,” he noted.

He also added that not all talents seek the highest salary or a fast-paced environment; many prefer a better quality of life, which Puchong offers. Companies like MaiStorage, a subsidiary of Taiwan’s Phison Electronics, have already established a presence in the park. Mai Storage’s investment could further stimulate Malaysia’s semiconductor sector, potentially drawing back Malaysian engineers working overseas.

Phison’s Malaysian co-founder, Pua Khein Seng, said he believes “Malaysia is more convenient, even though its efficiency is lower than Taiwan in terms of output.”

Mr Pua also mentioned that if Malaysia’s IC design sector takes off as expected, MaiStorage will require at least 500 engineers to meet its operational needs. Meanwhile, Penang Chief Minister Chow Kon Yeow is optimistic that the “Silicon Valley of the East” will attract and keep skilled workers. He noted that Malaysia is home to over 30 IC design companies, with 28 of them based in Penang.

The talent pool in Penang is well-established, and its capital, Georgetown, is launching a new initiative called “Penang Silicon Design @5km+” to attract, hire, and develop essential talent. MSIA’s Mr Wong added that Malaysia’s chip industry has built a strong ecosystem over the past five decades, helping to retain talent through competitive pay, good job prospects, and a balanced work-life environment. 

Major local companies like Oppstar, SkyeChip, Infinecs, and global giants such as AMD and Intel have employed over 7,000 engineers in Penang alone. Infineon Technologies, Germany’s largest semiconductor manufacturer, with over 500 employees in Penang, boasts one of the lowest attrition rates in the sector. 

According to Dr Raj Kumar, Senior Vice-President for Technology and Research and Development at Infineon, the company’s 5% turnover rate is well below the industry average of 10 to 15%, thanks to ongoing career development and training.

The Big Question

India is reportedly planning to send a group of people to Singapore for training, and have the group import the knowledge acquired domestically to boost semiconductor manpower in preparation for the booming industry.

According to Business Standard, in an effort to build talent for the semiconductor industry in India, the India Electronics and Semiconductor Association (IESA) is planning to send a batch of people — from industry to academics — on deputation to Singapore in the coming months. This is part of the recently-announced memorandum of understanding (MoU) with Singapore Semiconductor Industries Association (SSIA).

Ashok Chandak, President, IESA told the media, “What we are looking at is sending some of the people on deputation to Singapore and the SSIA would support. These people will spend three to six months in some of the fabs, get some training, come back and implement that in India. So, this is how the overall skill and talent development concept is going to work.”

A study by TeamLease Degree Apprenticeship revealed India’s semiconductor industry is expected to face a shortage of 250,000-300,000 professionals across various verticals by 2027. These include research and development (R&D), manufacturing, design, and advanced packaging. The collaboration between IESA and SSIA will have professionals and experts cross visit to train domestic talent.

Ashok added the Indian semiconductor is reportedly also exploring a similar partnership with its Taiwanese counterparts. However, Singapore is preferred since it has an advantage in terms of language and connectivity.

Meanwhile, Chinese semiconductor companies have also been actively recruiting talent from South Korea and making strategic acquisitions and investments, triggering concerns within the South Korean semiconductor industry in the recent years. 

The semiconductor industry, being the backbone of technological advancement, and its success is inherently linked to the skill and knowledge of its workforce. South Korea, home to tech giants like Samsung Electronics and SK Hynix, possesses a rich supply of semiconductor talent coveted globally. However, the aggressive recruitment efforts from China’s tech firms have raised concerns despite known shortcomings.

Given almost is powered by chip technology — from our smart devices to automotive, the competition can only get tighter and China is not inclined to be left behind in the competition. It brazen poaching of Korean talent is a strong message yet back-handed compliment to the latter country’s talent quality.

Amid China’s mission to achieve semiconductor self-sufficiency, the republic strategically targeted Korea’s pool of skilled engineers and researchers. Offering lucrative incentives and promising career prospects, Chinese companies have lured talent away from their Korean counterparts.

Malaysia is aggressively positioning itself as an optimum semiconductor hub. While claims were made that Singapore should not be deemed as a competitor, it just might be a tall order given trade means revenue. It will be worthwhile watching how the chip talent shifts around Malaysia, Singapore, China and Korea. 

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US semiconductor giant Intel Corp has denied reports that it plans to stop its 3D packaging and testing facility expansion in Penang amid financial challenges as the tech industry shifts towards AI servers and PC sales slow down. 

The bombshell was allegedly due to cash flow issues that led Intel to suspend dividend payments and initiate job cuts across its operations globally. The earlier report added this partial pause is likely to only affect Intel’s new plant and not its existing operations. The company, which employs about 14,000 workers, will also be reducing its headcount by about 15% in line with the global plan.

The Vibes.com added a company spokesman confirmed there were no changes to Intel’s plans to expand its state-of-the-art facility in Penang, although there has been speculation that the multinational corporation may need to adjust its operations to cut costs.

“Malaysia will remain an important market as we build on our long and proud history here,” the spokesman said. 

Since Intel disclosed its financial struggles last year, rumours have circulated about potential downsizing in Malaysia as the company shifts its focus to meet market demands in AI and other growth areas. Earlier reports suggested Intel had partially paused its Penang expansion, which is part of a US$7 (RM30) billion investment into Malaysia, first announced in 2021.

Intel, a pioneer in electronic investments in Penang since 1972, operates one of its largest plants outside the United States in Penang and Kedah, employing around 14,000 workers. There have been reports that Intel plans to cut jobs, potentially affecting up to 15% of its 131,000 employees globally. There are signs Intel could introduce early retirement and voluntary separation schemes to reduce its workforce.

The US$7 billion investment includes expanding operations in Kulim, bringing Intel’s total investment in Malaysia to US$14 billion by 2032. In its fiscal second-quarter report, Intel recorded losses of over US$1.6 billion, compared to a profit of US$1.48 billion in the same period last year.

Tech analysts suggest Intel must upgrade its processes to produce chips that meet the rising demand for AI services. The decline in PC sales, as users increasingly favour smartphones, tablets, and laptops, has further pressured Intel to adapt.

While the shift to remote working and studying during the pandemic briefly bolstered PC sales, the trend reversed as lockdowns were lifted. The tech industry continues to evolve, and Intel, having fallen into a stagnant phase, is now striving to catch up with companies such as Nvidia Corp, the world’s largest firm by market capitalisation.

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Source: Malaysian Investment Development Authority (MIDA)

Its products are recognised globally for its high cost-performance ratio and innovative technology, and they are widely used in education, research, industrial manufacturing, and communications. The company announced on 26 August 2024 the establishment of its subsidiary company in Penang, Malaysia, which is the first overseas manufacturing plant, R&D centre, and service centre. The new facility Rigol Technologies (Malaysia) Sdn. Bhd. is situated on 90,040 sqft of land with a factory footprint of 78,024 sqft.

With a total investment of over RM100 million, the new facility is divided into two main phases. The first phase, consisting of multiple production lines, has already commenced operations, focusing on the production of electronic test and measurement instruments.

The second phase will erect additional production lines and concentrate on establishing an advanced R&D centre and a comprehensive overseas service centre to support RIGOL’s ongoing commitment to innovation and customer service.

The Chief Executive Officer of the Malaysian Investment Development Authority (MIDA), Datuk Sikh Shamsul Ibrahim Sikh Abdul Majid, congratulated RIGOL on the opening of its new manufacturing facility, stating,

“We’re excited that RIGOL chose Malaysia for its first manufacturing plant outside of China! This investment not only creates high-value jobs, but it’s also a big opportunity for Malaysia to move up the supply chain ladder. The most important distinction here is how it aligns with the New Industrial Master Plan (NIMP) 2030, which is all about driving innovation and growth in the E&E sector.

At MIDA, we’re fully committed to facilitating developments like this that take Malaysia’s manufacturing sector to the next level. We’re looking forward to a productive partnership with RIGOL and hope other industrial specialists will consider Malaysia as their investment destination. Together, we can drive mutual growth and continue to enhance Malaysia’s high-tech ecosystem.”

Dato’ Loo Lee Lian, Chief Executive Officer of InvestPenang, stated,

“Penang, also known as the Silicon Valley of the East, has over half-a-century of industrialisation experience, making it a natural hub for attracting industry players within the E&E sector. Its established infrastructure, skilled workforce, and strategic location have consistently drawn leading global companies to set up and expand their operations here, reinforcing the state’s reputation as a premier destination for high-tech manufacturing and innovation. With that, I am confident RIGOL will be able to leverage on Penang’s robust industrial ecosystem to continue to uphold its mission of ‘enabling technology exploration, empowering possibilities and more”.

Mr. Wang Ning, the Chief Executive Officer of RIGOL Technologies Co., Ltd., stated,

“Rigol Technologies (Malaysia) Sdn. Bhd. not only represents a significant milestone in our global expansion strategy, but also underscores our dedication to delivering exceptional service to our international customers. By enhancing our service capabilities in overseas markets, we are positioning ourselves to better meet the growing demands of our clients, while simultaneously ensuring that we remain agile and responsive. Furthermore, this initiative allows us to maintain steady growth within the industry. By creating 150 job opportunities, RIGOL Technologies aims to nurture and develop a new generation of professionals in related technological fields. This is an exciting time for RIGOL, as we continue to build on our legacy of innovation and excellence.”

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Its stable government and rising currency gives the country an edge that entices foreign investments. While other Southeast Asian nations grapple with political challenges, Malaysia is actively soaking up foreigners — having received US$1.75billion for its debts. Kuala Lumpur’s stock market is gunning for its strongest yearly performance in well over a decade.

Analysts say the ringgit has been the instrumental in this outperformance, and Asia’s best-performing currency thus far in 2024 should do even better as the Federal Reserve starts cutting rates, increasing the appeal of Malaysian bonds.

“It’s been a fairly startling outperformance for the currency,” said Leonard Kwan, portfolio manager of T. Rowe Price’s dynamic emerging markets bond strategy. “I think most of the returns of the performance have come from the currency, rather than on the bond side.”

The comeback story for Malaysia is underpinned by an economy that expanded at its fastest in 18 months in the Q2 2024 and a stable political environment since Anwar Ibrahim became Prime Minister in 2022 after years of turbulence.

The relative underperformance of Malaysia’s rivals in the region has helped, with political turmoil in Thailand and concerns around the incoming Indonesian government rattling investors. The ringgit touched an 18-month high against the dollar on 22 August 2024, taking its gains for the year to more than 5%, a far cry from earlier this year when it languished near 26-year lows.

Image credit – Reuters Graphics

Ben Luk, Senior Multi Asset Strategist at State Street Global Markets, said the ringgit benefited from the yen’s strength in recent weeks as investors unwound the popular carry trade and rotated into currencies that were “under-owned and under-valued”.

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Source: NST

“We are proud to officially launch the Malaysia Semiconductor IC Design Park, three months after its initial announcement at the KL20 Summit in April. This remarkable progress within such a short time frame highlights the swift execution and unwavering commitment of all stakeholders involved,” Selangor Information Technology & Digital Economy Corporation (Sidec) CEO Yong Kai Ping.

The Malaysia Semiconductor IC Design Park, set up in collaboration with the federal government, international semiconductor firms, and venture capitalists, aims to position Malaysia as a potential powerhouse in the global IC design industry. The strategic initiative is designed to leverage Malaysia’s technological capabilities and resources, fostering innovation and advancing the country’s reputation in high-tech manufacturing and design.

The Malaysian government disclosed in April its plans to build Southeast Asia’s largest integrated circuit design park and will offer incentives including tax breaks, subsidies and visa exemption fees to attract global tech companies and investors.

The park site was meticulously chosen after an extensive evaluation process among the locations in Klang Valley. The process considered key factors essential for semiconductor companies, such as size, power capacity, building status, office fittings, potential for future expansion, and public transport accessibility.

The park is designed to house more than 400 IC design engineers from five local, international, and JV IC design companies. It includes anchor tenants Maistorage, Skyechip, Weeroc, AppAsia ChipsBank, SensoremTek Sdn Bhd and supported by ecosystem partners such as BlueChip VC, ARM Holdings, Cadence Design System, Synopsys, Siemens EDA and Keysight and Shenzhen Semiconductor Association.

Economy Minister Rafizi Ramli who was present at the launch, said the country needs to focus on developing its own semiconductor design capabilities rather than just relying on imported chips. He outlined the federal government’s strategic direction to enhance the entire semiconductor ecosystem, covering both upstream and downstream sectors, with a particular emphasis on original design manufacturers (ODM).

“The country is currently receiving significant investment into data centres, but data centres also require ODM. Therefore, the government is looking at the entire ecosystem to complete it. As this ecosystem takes place, data centers in Malaysia will begin to consider “Made by Malaysia” chips. That is the consideration the federal government is looking for,” he said at the launch.

Selangor Menteri Besar Datuk Seri Amirudin Shari said that Selangor does not aim to be a bit-part player in the semiconductor space, but intends to see semiconductors of the future with the label “Made in Malaysia, Designed in Selangor”.

“This should be our aim. This is our rallying call. This is crucial if we want to make Selangor Malaysia’s first RM 500 billion  economy in the coming three years. The primary goal of the park is to promote original design manufacturing, encouraging local involvement in product design, prototyping, and production. This project is not just about infrastructure; it is about creating opportunities and driving growth,” he added.

The park’s promoters are actively recruiting skilled candidates with degrees in electrical & electronics engineering, mechanical engineering, mechatronics, and computer science, offering highly competitive salaries. Entry-level positions start between RM5,000 and RM6,000 for fresh graduates, while individuals with a master’s degree or extensive industry experience can earn up to RM7,000. 

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Source: The Nation Thailand

Top six economies in Southeast Asia – Vietnam, the Philippines, Indonesia, Malaysia, Thailand, and Singapore (SEA-6) – are projected to grow at an average annual rate of 5.1%, outperforming China.Released on 1 August 2024 by the Angsana Council, Bain & Company, and DBS Bank.

A key factor driving this surge is a significant increase in FDI. For the first time in a decade, Southeast Asia attracted more FDI than China in 2023. Southeast Asia’s FDI amounted to US$206 billion while China received $43 billion. This represents a 37% growth in FDI for Southeast Asia between 2018 and 2022, compared to China’s 10%.

“Southeast Asia is experiencing a transformative shift,” said Charles Ormiston, Advisory Partner at Bain & Company and Chair of the Angsana Council. “Strong domestic growth coupled with the region’s strategic location has made it an increasingly attractive destination for global investors.”

While Southeast Asia has historically lagged behind economic powerhouses like China and India, it is now positioned for a period of rapid growth. The report highlights several factors contributing to this transformation:

• Strong domestic investment: Businesses are increasingly investing in Southeast Asia, fuelling economic expansion.
• Diversified economy: The region is expanding beyond traditional industries, with growth in sectors like technology, manufacturing, and services.
• Favourable demographics: Countries like the Philippines are benefiting from a young and growing population.

Vietnam is leading the region’s growth, followed closely by the Philippines and Indonesia. Vietnam and the Philippines are expected to exceed 6% growth, with Indonesia close behind at 5.7%. Malaysia follows at 4.5%, while Thailand and Singapore are projected to grow at 2.8% and 2.5%, respectively.

Taimur Baig, DBS Bank Managing Director and chief economist, expressed optimism about the region’s prospects. 

“The world is changing, and Southeast Asia is well-positioned to capitalise on these shifts. With the right policies and investments, the region can achieve even greater heights,” he said.

Southeast Asia — Transition From Resurgence To Growth 

The Philippines is set for robust growth at 6.1%, driven by a government committed to development, especially in infrastructure and renewable energy projects. Unlike Singapore and Thailand, the Philippines stands to gain from its favourable demographics. Indonesia’s economy is predicted to expand by 5.7%, with room for even higher growth. This potential stems from its rich natural resources, growing population, and vibrant startup scene.

To fully capitalise on these advantages, Indonesia needs to broaden its economic base beyond raw materials and foster a more open, competitive business environment. Malaysia’s projected 4.5% growth rate is underpinned by its renewed focus on attracting foreign investment, particularly in established sectors like semiconductors. The country is also well-positioned to benefit from spillover effects from Singapore, notably in the expanding data centre industry. 

In fact, Malaysia could potentially more than double Singapore’s current data centre capacity, challenging the city-state’s regional dominance in this sector. While Thailand’s growth forecast is more modest compared to its regional counterparts, the country still holds considerable promise.

Its economic strengths include a recovering tourism industry, a well-established position as a regional automotive manufacturing hub with solid infrastructure, and the presence of conglomerates with a strong regional focus, the report said.

Looking ahead, to accelerate growth, the experts pointed out that SEA-6 needed to adopt strategies to redirect resources, make bold policy changes and take risks in some issues such as infrastructure development, education, and environmental sustainability to fully realise its potential.

The report also identifies five key opportunities to accelerate growth in Southeast Asia. These include investing in emerging growth sectors, encouraging technology-enabled disruptors, strengthening capital markets and increasing investment, accelerating the green transition, and supporting multilateral initiatives.

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Source: Bernama

Tengku Datuk Seri Zafrul Abdual Aziz, Malaysia’s Investment, Trade and Industry Minister, said the global medical devices industry is projected to grow to US$887 billion by 2032 from US$542 billion projected for this year.

“Malaysia has a solid foundation, thriving ecosystem and strong political will to engineer the rapid growth of our manufacturing industry by engaging key stakeholders, particularly industry members. The nation can be a manufacturing hub for medical device enabling global brands to serve the 670 million population ASEAN market, or even the 4.7 billion population Asian market.”

He added the groundbreaking ceremony is another step towards bringing New Industrial Master Plan 2030’s (NIMP2030) action plans to life — noting Plexus’ focus on Semiconductor Capital Equipment, as well as the Healthcare and Life Science sector, aligns with the priority sectors under NIMP2030.

“This will create a strong manufacturing ecosystem driven by dynamic partnerships between leading global companies and Malaysian firms, powered by world-class talents. This is what makes Malaysia an Asia’s manufacturing and services hub,” he added.

Victor Tan, Plexus’ Regional President said the new facility demonstrates Plexus’ commitment to regional growth and provides a strong opportunity to meet the growing customers’ needs. The state-of-the-art facility spanning 8.09 hectares will encompass cutting-edge infrastructure with an estimated investment value of RM1 billion over the next three years.

This initiative will also create some 1,800 employment opportunities, on top of its 10,000 member workforce.

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Foreign companies are moving their manufacturing facilities out of China to establish production hubs in other countries as trade tensions continue to brew between China and the US. Malaysia, the world’s sixth largest exporter of semiconductors in the world, has greatly benefited from this strategy known as China Plus One, where companies diversify their business outside of China.

Malaysia has a 50-year edge in the sector given that Intel established its first international manufacturing plant in the northern state of Penang. Intel is also building another factory in Penang that will be the US States chip giant firm’s overseas facility for advanced 3D chip packaging. Malaysia is on a particularly attractive spot given that many semiconductor and electric vehicle companies relocating to Southeast Asia to bypass trade restrictions and strengthen their supply chains.

The country has an existing ecosystem in Penang and the neighbouring Kulim in Kedah. This provides an option for technology companies seeking to date-risk amidst intense rivalries between the US and China over cutting-edge technologies.

Philippines — The Alternative Location

It seems Philippines is also attracting attention from Chinese enterprises, Manufacturing Asia noted. JLL, a global real estate company, states that companies are diversifying their manufacturing locations across India and Southeast Asia, including the Philippines, to offset supply chain disruptions in China.

China has dominated global manufacturing for decades. However, JLL noted that companies are “increasingly diversifying their operations elsewhere, adding manufacturing bases outside of China to hedge against supply chain disruptions.” Rising costs in China, the firm said, have pushed manufacturers to expand to other countries, with land prices in China being up to twice higher than in Southeast Asian countries and India.

Michael Ignatiadis, JLL Asia Pacific Head of Manufacturing Strategy stated that diversification within supply chains is a natural step for companies involved in manufacturing within the wider economic lifecycle of Southeast Asia and India. The Philippines, in particular, has caught the attention of the US with its inclusion in the CHIPS Act, which aims to expand and diversify the semiconductor supply chain such as integrated circuits, RF/microwave, and assembly and testing services.

JLL also noted the record-high of US$49.1 billion in electronics exports in 2022, including consumer and industrial electronics, as well as telecommunication equipment. The firm, added the manufacturing sector should make a careful evaluation of non-cost or qualitative factors when deciding to diversify.

Skilled labour, infrastructure, environmental regulations, proximity to suppliers and political stability are all crucial for long-term success and sustainability in manufacturing operations. Peter Guevarra JLL Asia Pacific Director and research consultancy said that each economy in Southeast Asia is at a different level of its manufacturing storey.

“But we can confidently say that policymakers are extremely keen to take advantage of diversification initiatives of supply chains,” he stressed.

Companies must also carefully evaluate various factors such as costs, market access, infrastructure, labour and governmental support before making investment decisions. 

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Foreign companies are moving their manufacturing facilities out of China to establish production hubs in other countries as trade tensions continue to brew between China and the US. Malaysia, the world’s sixth largest exporter of semiconductors in the world, has greatly benefited from this strategy known as China Plus One, where companies diversify their business outside of China.

Malaysia has a 50-year edge in the sector given that Intel established its first international manufacturing plant in the northern state of Penang. Intel is also building another factory in Penang that will be the US States chip giant firm’s overseas facility for advanced 3D chip packaging. Malaysia is on a particularly attractive spot given that many semiconductor and electric vehicle companies relocating to Southeast Asia to bypass trade restrictions and strengthen their supply chains.

The country has an existing ecosystem in Penang and the neighbouring Kulim in Kedah. This provides an option for technology companies seeking to date-risk amidst intense rivalries between the US and China over cutting-edge technologies.

Tech Investment Surge

Malaysian Prime Minister Anwar Ibrahim has been actively seeking high-tech investments by travelling overseas to build relationships with potential investors. In March 2024 on SME Future Day 2024, he extended an invitation to German businesses and companies across Europe to invest in Malaysia, emphasising the country’s strategic location for accessing the Chinese market.

Foreign direct investment in Malaysia’s tech sector has been steadily increasing since 2021, with major companies like Intel, Infineon Technologies, AT&S, and Nvidia making significant investments there. However, as Malaysia aims to move up the value chain, it faces challenges such as stiff competition from neighbouring countries like Indonesia and Vietnam, as well as constraints in local supply chains.

Former Deputy Minister of International Trade and Industry, Ong Kian Ming, highlighted the challenge of getting the right kind of human resources and skilled labour to become part of the higher value-added manufacturing or services ecosystem.

“We’ve seen examples of how some Chinese companies who have come into Malaysia in the past, they do not fully integrate with the local supply chain,” he stressed.

This means is local SMEs (small- and medium-size enterprises) in Malaysia and other companies are not able to benefit from the FDI coming into Malaysia, he pointed. The Malaysian government is not only looking to attract foreign investments but also to engage domestic companies and investors, particularly government-linked investment firms.

Minister of Investment, Trade, and Industry, Tengku Zafrul Abdul Aziz, announced plans to develop a strategic semiconductor plan to enhance competitiveness in the industry, which includes updating laws and incentive packages to support local businesses. This will spell brand new opportunities for the metalworking sector, from metalcutting, machining, metrology right up to sheet metalworking. 

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Public Investment Bank Bhd (PublicInvest) remarked Malaysia’s PMI is expected to follow global trends, consistently exceeding the 50-level mark in the second half of 2024, as long as global uncertainties stabilise. The company added Malaysia’s manufacturing sector is set for positive growth in 2024, driven by strong projections in the global semiconductor market.

With electric and electronic (E&E) exports making up over 40% of Malaysia’s total exports, the sector is expected to benefit significantly. Despite the tension between countries and economic uncertainties, Malaysia’s exports are predicted to increase by 5.4% year-on-year in 2024. Improved economic governance and competitiveness ranking also support this positive outlook.

PublicInvest also noted the average PMI reading for the Q2 2024 reached its highest level since the third quarter of 2022, indicating a positive trajectory for economic growth throughout the quarter. However, the firm mentioned business sentiment declined for the fifth consecutive month in June, reaching its lowest point since August 2023, which could impact some optimism.

Kenanga Research shared similar sentiments, anticipating significant growth in the manufacturing sector due to strong domestic demand and foreign direct investments. The labour market is expected to improve with the implementation of the progressive wage policy, supporting recovery in the manufacturing sector. Additionally, the firm believes that the global semiconductor industry’s improvement, driven by computing needs and China’s economic recovery, will benefit Malaysia.

Thus, Kenanga Research has maintained its optimistic GDP projection of 4.5% to 5%in 2024, in line with forecasts from Bank Negara Malaysia and the Ministry of Finance. S&P Global Market Intelligence reported Malaysia’s manufacturing sector remained steady at the end of the second quarter, supported by an increase in new orders over the past two months. Whilst demand overall remained subdued, higher exports partly contributed to this growth.

In June, the seasonally adjusted S&P Global Malaysia Manufacturing PMI was 49.9, slightly less positive compared to May. However, the average reading for the Q2 2024 was the highest since the Q3 2022, suggesting a positive outlook for economic growth during that period.

Tight Competition

In the semiconductor sector, competing for pole position between Malaysia and Vietnam is intensifying. Semiconductor competition continues after Malaysia announced her mission to be Southeast Asia’s largest integrated circuit design park last April. Now, Vietnam joins the competition for the same crown, with the support from an American semiconductor titan – Marvell Technology Inc.

Marvell Technology, Inc., a titan in data infrastructure semiconductor solutions, accelerated the growth of its workforce and presence in Vietnam in the past year since the company announced plans to expand R&D, engineering and design activities in the country. Marvell committed to 50% growth of its workforce in Vietnam in three years, a target shared by the company during last year’s U.S.-Vietnam Innovation and Investment Summit attended by Marvell Chairman and CEO Matt Murphy. Today, Marvell is ahead of its plans, achieving more than 30% growth in just eight months.

Marvell has also expanded its physical footprint in Vietnam with a new location in Da Nang, adding to its offices in Ho Chi Minh City. The growth of its footprint demonstrates the company’s commitment to creating a world-class semiconductor design hub in the country.

While the commentary did not specify semiconductor per se, consumer electronics manufacturing and exports should not be used as a blanket indicator for the country’s performance into H2 2024.

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Letter to the Editor
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The post Malaysia Manufacturing Sector To Grow In H2 Despite Dip In June appeared first on Asia Pacific Metalworking Equipment News | Manufacturing | Automation | Quality Control.