Igniting Malaysia S Semiconductor Industry Beyond Assembly

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From Saat Shukri Embong
Malaysia stands at a defining crossroads in its technological journey. For decades, we have been a trusted hub for global semiconductor giants, with exports surpassing RM500 billion annually. Yet, despite this remarkable achievement, our sector’s contribution to GDP remains disproportionately low, at less than 7%. This paradox highlights an uncomfortable truth – we are critical to the global supply chain but are not in control of our own destiny.
The Malaysian semiconductor industry is highly skilled and deeply embedded in advanced manufacturing, but we are not truly part of the global semiconductor ecosystem. We serve as an assembly and production hub for multinational corporations (MNCs), but our local industry players struggle to gain market access, secure intellectual property (IP) ownership, and compete in the global value chain. This is not a technology or talent issue – it is a structural business challenge.
For too long, our businesses have lacked direct access to global markets. We have witnessed past semiconductor initiatives such as RFID MM Chip (through Senstech Sdn Bhd in 2006) and earlier projects in EEPROMs (electrically erasable programmable read-only memory) – via MyMS Sdn Bhd – struggle despite acquiring IP from international firms from advanced countries. The reason? Market access and demand generation were not sufficiently addressed.
Despite our efforts to advance in packaging and chip design, history has repeated itself. The Northern Corridor Economic Region’s multiple attempts to establish an advanced packaging centre – such as through the stimulus package of 2010, and 2002 initiatives in 2D/3D packaging at AIC Corporation, BGA lines at AMD (Fabtronic), and other ventures – have largely remained underutilised because we never addressed the core challenge, which are business opportunities and market access.
Why remain a component supplier?
The key to long-term resilience is not just technological capability, but market ownership. While new partnerships with Arm Holdings and increased investment in integrated circuit (IC) design are encouraging, they alone will not solve our fundamental problem – our local companies need real, sustainable business opportunities.
We need to create our own demand. The only way to ensure a thriving local semiconductor industry is to build our own branded consumer electronics, electric vehicles, industrial automation solutions, and internet of things (IoT) products.
When we create final products designed and manufactured in Malaysia, we automatically generate demand for locally designed semiconductors, ICs, and electronic modules. This is how ecosystems are built.
Other nations have demonstrated this approach:
South Korea nurtured national brands like Samsung and LG, which in turn created a thriving semiconductor industry that serves both domestic and global markets.Taiwan did not just assemble chips – it strategically specialised in wafer fabrication and now controls over 60% of global chip manufacturing through Taiwan Semiconductor Manufacturing Company (TSMC), UMC and other firms.Malaysia has the talent, infrastructure, and strategic location to become an industry leader. But we must act decisively to move beyond contract manufacturing and into full-scale product innovation.
Why we struggle to scale globally
Our most pressing challenge is that Malaysian semiconductor and electronics firms are not fully integrated into the global value chain. Unlike Taiwan, South Korea and China, our companies face structural roadblocks:
Limited market access – without strong local demand for chips and components, our semiconductor firms lack the volume and scale to compete globally.Dependence on foreign players – most of Malaysia’s semiconductor exports are from multinational corporations, not Malaysian-owned firms.Lack of brand ownership – Malaysia does not have strong national brands in consumer electronics, automotive, or industrial technology to drive demand for locally made chips.Absence of a national champion – unlike Samsung (South Korea) or TSMC (Taiwan), Malaysia does not have a flagship semiconductor company that dominates a critical market niche.To break free from this dependency, Malaysia must focus on end-consumer products. Without locally manufactured products driving domestic demand for semiconductors, our industry will remain stuck in the cycle of providing skilled labour and assembly services for foreign corporations.
A strategic path forward
To achieve semiconductor sovereignty, Malaysia must take control of its chip design ecosystem. The global semiconductor industry is built around three key architectures:
x86 (CISC) – the dominant architecture for PCs and servers, controlled by Intel and AMD. This market is highly proprietary and power-intensive, making it unsuitable for Malaysia’s ambitions.ARM (RISC) – the leading architecture for mobile and embedded systems. ARM’s energy-efficient design provides an excellent starting point for Malaysia to design custom chips for Asean’s consumer electronics, electric vehicles and smart cities.RISC-V (Open-Source) – a revolutionary architecture that allows companies to design processors without paying licensing fees. Although still maturing, RISC-V represents a long-term investment in technological sovereignty.By leveraging ARM for immediate market entry and investing in RISC-V for long-term independence, Malaysia can establish itself as a true semiconductor power.
Building a self-sustaining local semiconductor ecosystem
To turn this vision into reality, we need decisive leadership, clear policy direction and bold investments. Here’s what Malaysia must do:
Establish a quadruple helix national semiconductor task force: This task force must unite industry leaders, government agencies, academia and civil society to create an agile 10-year semiconductor roadmap. The goal? To integrate Malaysian firms into the global value chain and establish a self-sustaining industry.Strategic investment in Malaysian chip design firms: The government should provide co-investment grants to local IC design companies developing ARM and RISC-V chips. For every ringgit raised by local firms, the government should match it, following the model of successful tech incubators worldwide.Accelerate talent development in embedded systems and AI: By 2030, Malaysia should train at least 10,000 engineers specialising in chip design, embedded systems and AI-driven semiconductor applications. This should be done through partnerships with ARM, RISC-V International and Malaysia’s leading universities.Develop local consumer electronics and industrial products: Malaysia’s semiconductor industry must be demand-driven. By prioritising the development of Malaysian-made smart devices, EVs, and automation systems, we can ensure that local semiconductor firms have a thriving domestic market.This is our moment to lead
I write this not as a critic, but as a firm believer in Malaysia’s potential. Our people are resourceful, resilient and capable of extraordinary achievements. The transformation of Malaysia’s semiconductor industry is not just an economic necessity – it is a matter of national pride and future security.
We have spent decades as a trusted manufacturer for global companies. Now, it is time to be the innovators, the brand owners and the industry leaders.
The world is changing rapidly. Technology is shaping the future of nations. Will Malaysia seize this moment and lead in semiconductor innovation?
The choice is ours. The time for bold decisions is now. - FMT
Saat Shukri Embong is the acting president and group CEO of Mimos Bhd, with over 30 years of experience in Malaysia’s semiconductor industry.
The views expressed are those of the writer and do not necessarily reflect those of MMKtT.

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