KUALA LUMPUR: Malaysia will continue to strengthen its ties with international markets in the semiconductor industry following the return of Donald Trump as the president of the United States.
This comes with the anticipation of protectionist measures following Trump’s re-election.
Deputy Investment, Trade and Industry Minister Liew Chin Tong said Prime Minister Datuk Seri Anwar Ibrahim and the Malaysian delegation have worked hard to build ties between the Malaysian semiconductor industry and the Brazilian semiconductor industry.
Two memoranda of understanding (MoU) were inked between the two countries following Anwar’s recent working visit to the Latin American country, allowing Malaysia to position itself as a global hub for semiconductor innovation and manufacturing.
“The Malaysia Semiconductor Industry Association (MSIA) is also in talks with its counterpart in the Netherlands, while the government is working with Asean member states on the semiconductor industry.
“We are also talking to Saudi Arabia in a very serious manner. This is so that we can avoid a strict bifurcation of the global supply chain,” he told the media at the MSIA National Electrical and Electronics (E&E) Forum 2024 here, yesterday.
Deputy Investment, Trade and Industry Minister Liew Chin Tong
Liew said as the world’s sixth largest semiconductor exporter, Malaysia holds a 7% share of the global market and contributed to 23% of US semiconductor trade in 2022.
“The world is still very much exporting to the United States, and we hope that we can work with the United States in a very close manner,” he added.
According to him, there is a “huge middle power” where Malaysia can play a role within the global semiconductor supply chain. And in the coming 10 to 15 years, Malaysia has to be clear in its strategy and goal.
“We need to work with partners to build that strong middle power, so that we can be a centre in which global business in the semiconductor industry can be conducted from”.
He added local players should continue moving up the value chain by creating its own technology – especially within the artificial intelligence (AI)-realm.
This is to be coupled with horizontal expansion and innovation, which he said “so that whatever capability we have at multiple levels in the semiconductor industry can also be used to solve daily problems and therefore creating Malaysian innovation”.
He proposed adopting a flexible industrial policy framework, stressing that it does not need to be comprehensive.
Recognising Malaysia’s constraints as a trading nation with an open economy, he urged for broader strategies to leverage tools from the industrial policy “toolbox.”
He also advocated for blending public and private funds, emphasising that investments should not rely solely on grants but include collaborative financing approaches.
He gave an example of which the Malaysian government has directed government-linked investment companies to work on a gear-up programme, which channels RM120bil into Malaysian technologies over the span of five years.
“I think this is the direction that will work and I hope this can actually become into something that is able to create Malaysian technologies. So, having the private and public coming together to find ways to fund technology is important,” he said.
Despite global challenges, he remains optimistic, noting that the semiconductor industry is a strategic industry not only for Malaysia, but for the whole world because of the increasing uses of AI technology, which requires semiconductors.
When asked about the outlook on E&E exports for 2025, MSIA president Datuk Seri Wong Siew Hai said there will be more clarity on where the industry is heading in the first quarter of financial year 2025, once policies by the United States government have been decided. He told StarBiz that the local semiconductor industry may experience single-digit growth in 2025 in line with the global economic trends.
“We have received strong E&E investments this year and our E&E exports for the first 10 months, from January to October 2024 is RM491bil, which is up 1.5% compared to last year. I am still hoping that it will breach RM600bil by the end of the year,” he said.
Sharing a similar view, Tradeview Capital chief investment officer Nixon Wong also anticipates a rather muted growth from the end of 2024 entering next year.
Malaysia’s E&E export is very dependent on the semiconductor recovery globally – which is anticipated to kick in somewhere around the second half of 2025.
“There is some chance of earlier recovery, with all eyes on potential restocking from the United States front as well as economic growth recovery from the China front.
“We may also need to factor in the movement of the ringgit against the US dollar as well.”
Hence, Wong is of the view that companies with more US exposure may tend to benefit more than those with exposure to China. With Trump ‘s being pro-US, capital expenditure growth is expected to come from US companies, while trade policies may cap China’s export.
“The situation is fluid and depends on how aggressive the United States trade tariff on China and also on the rest of the world, which may cap overall demand growth,” he added.
On a separate note, two MoU signings were completed between Elliance Sdn Bhd and SkyeChip Sdn Bhd, as well as between Elliance, Kaitech Sdn Bhd and Estek Automation Sdn Bhd at yesterday’s event. The parties will form a strategic partnership to design and produce Malaysia’s first Edge AI system.
