Semiconductor Industry: Prospects and Challenges

The semiconductor industry is key to the global technology sector, and its prospects are closely tied to advancements in various fields such as artificial intelligence, 5G, the Internet of Things (IoT), and electric vehicles (EVs). As for Malaysia, its role in this industry is significant, and its future may seem promising due to several factors:

1. Strategic Location

Malaysia is geographically well-positioned in Southeast Asia, providing easy access to major markets like China, India, and other ASEAN countries.

2. Established Ecosystem

The country has a well-established semiconductor manufacturing ecosystem, with a strong presence of multinational corporations and local players involved in various stages of the semiconductor supply chain, from wafer fabrication to assembly and testing. 

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3. Skilled Workforce

Malaysia has been investing in education and training to develop a skilled workforce capable of supporting high-tech industries. This includes specialized programs in engineering and technology fields relevant to semiconductor manufacturing.

4. Government Support

The Malaysian government has been supportive of the semiconductor industry through various initiatives, including tax incentives, grants, and the development of specialized industrial parks like the Kulim Hi-Tech Park.

5. Diversification

Malaysia is looking to diversify its semiconductor industry by moving up the value chain. This includes efforts to attract investments in higher-value activities such as integrated circuit design and the manufacture of more sophisticated components.

6. Global Demand

The global demand for semiconductors is expected to continue growing, driven by the proliferation of smart devices, the expansion of IoT, and the transition to greener technologies. This bodes well for Malaysia's semiconductor industry.

7. Trade Agreements

Malaysia is part of various trade agreements that can benefit its semiconductor industry, such as the Regional Comprehensive Economic Partnership (RCEP), which can enhance trade flows and reduce tariffs among member countries.

8. Challenges

Despite the positive outlook, Malaysia faces challenges such as competition from other countries, the need for continuous technological innovation, and the impact of global economic fluctuations on the semiconductor market. 

Malaysia has been one of the largest exporters of semiconductor devices and integrated circuits. The semiconductor industry is one of the largest employers in Malaysia's electrical and electronics (E&E) sector. The global semiconductor industry has seen a CAGR of around 4-6% over the past decade, and Malaysia's growth has been somewhat aligned with global trends.

Looking ahead to 2030, several factors could influence the value, workforce size, and CAGR of Malaysia's semiconductor industry:

1. Industry Value

The value of the semiconductor industry is expected to grow as demand for semiconductors continues to rise with the expansion of 5G, AI, IoT, and EVs. Malaysia's industry value could potentially increase proportionally with global growth, which some estimates suggest could see the global semiconductor market reach over $1 trillion by 2030.

2. Number of Workers

The number of workers may not grow at the same rate as the industry's value due to automation and the adoption of more advanced manufacturing technologies. However, there will still be a need for skilled workers, particularly in high-value areas such as semiconductor design and R&D. 

3. CAGR

The CAGR for Malaysia's semiconductor industry could remain steady or increase if the country successfully moves up the value chain and captures more of the global market share in higher-value semiconductor activities. The CAGR will depend on Malaysia's ability to innovate, attract investment, and navigate global competition.

A lot of work needs to be done between MITI, the Association and various large market players. We have Vietnam, Taiwan, India and Singapore as our competitors, and they don’t have other peripheral issues to contend with!