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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The post More Factories Relocate From China To Malaysia Over Restrictions appeared first on Asia Pacific Metalworking Equipment News | Manufacturing | Automation | Quality Control.

Currently, steel and metal industries are hit hardest in Thailand as production costs remain high and cheap Chinese goods flow into the market. Thailand had 561 factories shutting down this year, primarily in the steel and metal industries. The Federation of Thai Industries (FTI) warns that if production costs, including energy, transportation, and interest rates, remain high, more closures are likely.

The FTI is urging the government to take immediate measures to support businesses. ML Peekthong Thongyai, the federation’s Vice Chairman, said the FTI is closely monitoring the ongoing trend of factory closures. According to data from the Department of Industrial Works, 561 factories closed between January and May, resulting in 15,342 job losses, averaging about 3,000 jobs per month.

These included 12 plastic factories, 11 metal factories, and 8 wood processing factories. Continuing high production costs, including interest rates, are raising concerns that more closures may follow.

The FTI is urging the government to implement additional measures to support business operators. However, businesses must also adapt and find ways to reduce costs. Over the past two years, low-priced goods have flooded the market, intensifying competition.

In spite of economic trials and tribulations, Thailand is certainly not backing down without a fight. Local auto parts manufacturers are being urged to adapt to the technological disruption caused by electric vehicles (EVs) and transition to the production of medical devices, which are expected to have a promising business future, the Federation of Thai Industries (FTI) added.

The Nation quoted FTI that auto parts makers familiar with internal combustion engines (ICE) are struggling to adapt to electric mobility technology, as many of their products are no longer required by EV makers. 

“We will discuss this shift with the government and hope to create new product champions in the medical field,” said Isares Rattanadilok Na Phuket, vice-chairman of the FTI. “This can become another effort to stimulate the economy.”

Transition To Medical Devices

The Nation added a cluster under FTI Mobility-ONE, which is a new unit under the federation, believes auto parts producers can transition to manufacturing medical products, including some single-use devices such as test kits to diagnose illnesses, and durable items such as wheelchairs and hospital beds. Known as CFM-ONE, this cluster was established last year to support the development of Thailand’s automotive industry and help car and auto parts companies cope with challenges in their businesses.

Up to 1,700 auto parts makers are members of the FTI. Most of them are small or medium-sized original equipment manufacturers, clkassed as Tier 2 and 3 in the auto parts supply chain. Auto parts producers in Tier 1 are usually subsidiaries of global car companies. 

Manufacturers in the second and third tiers, skilled in plastic stamping and tasks involving rubber and electronics-related manufacturing processes, have the potential to pivot their operations towards the production of medical devices. According to Krungsri Research, Thai medical device manufacturers are expected to enjoy solid rates of growth from 2023 to 2025, with the value of goods distributed domestically and internationally forecast to expand by an annual average of 5.5-7.0% and 6.5-7.5%, respectively. 

Markets will be lifted by a number of factors, including the aged society and the accompanying rise in rates of illnesses, the threat of newly emerging diseases, rising interest in preventive healthcare in the post-pandemic era, and growth in demand for medical tourism.

According to Krungsri Research, Thailand is recognised globally for its high quality of care and low costs. CFM-ONE said it would cooperate with global car manufacturers to assist local auto parts makers who want to continue businesses in the automotive industry in shifting to producing parts for EVs.

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Letter to the Editor
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The post Thailand Auto Parts Makers Can Bounce Back If They Diversify appeared first on Asia Pacific Metalworking Equipment News | Manufacturing | Automation | Quality Control.

Steel and metal industries are hit hardest in Thailand as production costs remain high and cheap Chinese goods flow into the market.

Source: The Nation, Thailand

What You Missed:

Plant And Machinery Valuation – EDM Wire Cutting Machines
Power Of Industry 4.0 Unlocked At METALTECH & AUTOMEX 2024
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Tesla Profits Decline By More Than 50% In Q1 2024
Tesla Reduces Full Self-Driving Software Price To US$8,000
Researchers Turn Metal Waste Into Catalyst For Hydrogen
Is AI Is Looking More Like A Band Aid Now?
Rever Automotive Builds And Tests BYD Buses In Thailand
Tesla Cuts More Than 10% Of Its Workforce
Tesla Settling Lawsuit Erodes Faith In Autonomous Driving

WANT MORE INSIDER NEWS? SUBSCRIBE TO OUR DIGITAL MAGAZINE NOW!

CONNECT WITH US:  LinkedIn, Facebook, Twitter

Letter to the Editor
Do you have an opinion about this story? Do you have some thoughts you’d like to share with our readers? APMEN News would love to hear from you!

Email your letter to the Editorial Team at Christellee@epl.com.sg

The post 561 Metal And Steel Sector Factories Folded This Year In Thailand appeared first on Asia Pacific Metalworking Equipment News | Manufacturing | Automation | Quality Control.