How Selangor Drives Malaysia S Semiconductor Industry Shift

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On Jan 25, 2024, the Hindu festival of Thaipusam, Selangor executive councillor Ng Sze Han and Menteri Besar Amirudin Shari carved out an hour from their busy constituency schedules for a breakfast meeting.
Together with Yong Kai Ping, chief executive of the Selangor Information Technology and Digital Economy Corporation (Sidec), the trio met a special visitor to discuss the future of Malaysia’s semiconductor industry.
The visitor, Lai Pin Yong, was one of Malaysia’s semiconductor pioneers, hired as part of Intel’s first batch of engineers when the American giant set up in Penang in 1972, later climbing the corporate ladder to senior international positions at both Intel and Motorola.
Now at the age of 80, Lai (above, left) urged Selangor to break free from Malaysia's traditional dependence on the backend of the semiconductor supply chain and to seize a higher-value role in chip design.
His message struck a chord. Right after the meeting, when on their way to their constituencies in their cars, Amirudin rang Ng to ask what he thought.
"I told him, 'I'm convinced,'" Ng recalled. "I agree that if we are serious about growing the economy and the semiconductor industry, this is where we must focus."
Selangor state executive council member Ng Sze HanAccording to Ng, the menteri besar's reply was equally direct: "Kita buat (let's do it)!"
Ng recounted the story recently in a Chinese-language podcast with Malaysiakini. It was released last Thursday on YouTube, Spotify, and Apple Podcasts.
From testing hub to design ambitions
Malaysia has long been a crucial link in the global semiconductor supply chain. Penang's Bayan Lepas and Kedah's Kulim are renowned hubs for backend assembly and testing, hosting multinationals and anchoring thousands of skilled jobs.
Yet, however vital, this role has kept Malaysia at the lower rungs of the value chain. The lucrative and strategically critical frontier lies in design and research and development, domains long dominated by the United States, Europe, Taiwan, South Korea - and increasingly, China.
This breakfast meeting became a pivotal moment for Selangor's ambition to lead Malaysia's next phase in semiconductors.
Lai's advice gave Selangor the direction to aim higher. Soon after Thaipusam, Ng and his team set off on study tours to Shenzhen, Suzhou and Taiwan.
Their takeaway was clear: Selangor needed a common platform that would lower barriers for chip design firms to set up offices and scale quickly.
Design park opens
By August, just seven months after that breakfast, Malaysia's first semiconductor integrated circuit (IC) design park opened in Puchong, with a second facility planned for Cyberjaya.
The park provides incentives such as rent-free periods and access to expensive Electronic Design Automation (EDA) tool licences.
EDA is a category of software tools used by engineers to design and verify complex electronic systems, such as semiconductors and printed circuit boards.
These tools are essential for the front-end chip design process, but their high cost can be a significant barrier for startups and small-to-medium enterprises.
By providing access to them, the park aims to reduce financial hurdle for new companies.
Study tour
During the preparation for the park, Ng flew to Taiwan three times - both to study its ecosystem and to persuade Phison Electronics founder and CEO Pua Khein Seng to bring his expertise back to Malaysia.
Phison Electronics founder and CEO Pua Khein Seng"In Hsinchu, I visited Phison's massive headquarters - more than 5,000 engineers," Ng recalled.
"After the tour, Pua personally drove me to dinner. During that short car ride, he shared so many insights and promised that if we built an IC design park, he would come back and support it."
Pua has since returned to set up Maistorage, a subsidiary of Phison, at the Puchong IC design park. This marks the technologist's second attempt to establish a business footing in Malaysia, after a failed venture in 2012.
Mid-year, Ng took a two-day trip to Paris to meet Salleh Ahmad, one of the three co-founders and chief technology officer of French microchip maker Weeroc. The gamble paid off.
"We spoke for an entire afternoon, and they agreed to open an office in Selangor (the Puchong IC design park).
"Salleh even said, ‘I've waited more than 20 years for this opportunity,’” Ng recalled the conversation.
From brain drain to brain circulation
Salleh's journey mirrors that of many Malaysian engineers abroad. After graduating from ESIEE Paris in 2009 with a degree in microelectronics, he stayed in France to pursue a doctorate in astrophysics and build a career, as Malaysia simply did not have a matching job for him.
Salleh Ahmad (left), chief technology officer of French microchip maker WeerocAccording to Ng, Salleh's family lives in Ampang Jaya, Selangor. For years, he would endure long-haul flights home every few months to see them.
Now, with Weeroc anchoring a presence in Puchong, he can balance both worlds.
Ng opined that Malaysia must abandon the old obsession with "brain drain" and "returning talent".
"What we need is brain circulation," he said. "Even if they don’t physically come back, their expertise and networks can still help us grow."
The state has already tapped such expertise. Former vice-president at Nvidia and Foxconn Lai Yit Loong is now an adviser to Sidec, alongside PKR deputy president Nurul Izzah Anwar.
For Selangor, the challenge now is to build on these initial efforts to create a sustained ecosystem and help Malaysia become a centre for innovation, not just manufacturing.
- Mkini

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