Penang, Malaysia, is setting its sights on revitalizing its reputation as the 'Silicon Valley of the East' by strategically moving up the semiconductor value chain. The state aims to attract US$115 billion in investments by 2030, positioning itself as a significant player in the global semiconductor market. Currently, Malaysia ranks as the sixth-largest semiconductor exporter, holding 7% of the global market share and contributing 23% to US semiconductor trade in 2022. To support this ambition, over US$5.6 billion has been allocated under the national semiconductor strategy since May 2023. [e5687c0d]
The state is home to more than 350 multinational corporations, including industry giants like Intel and Infineon. Chief Minister Chow Kon Yeow has emphasized the importance of a long-term vision for technological growth in Penang. However, challenges loom on the horizon, including the potential downsizing of Intel's operations in the region and existing infrastructure constraints. [e5687c0d]
In light of ongoing geopolitical tensions, particularly the US-China trade war, Malaysia's Ministry of Investment, Trade and Industry (MITI) has indicated that the country could enhance its appeal as an investment destination. The Deputy Minister, Liew Chin Tong, highlighted efforts to strengthen international semiconductor ties with countries such as Brazil, the Netherlands, and Saudi Arabia to prevent a strict bifurcation of the global supply chain. [3597ee6d]
To address infrastructure challenges, a US$100 million power transmission project is currently underway, aimed at supplying 2,000 megawatts of power to support the semiconductor industry. Additionally, water infrastructure projects worth 1.18 billion ringgit (approximately US$27 million) are planned to ensure adequate resources for manufacturing needs. [e5687c0d]
In a significant move, the Silicon Island reclamation project commenced in September 2024, with an expected completion date in 2032. This initiative is part of Penang's broader strategy to enhance its technological capabilities and infrastructure to attract further investments in the semiconductor sector. [e5687c0d]
As global demand for semiconductors continues to rise, Penang's efforts to reclaim its title as a leading semiconductor hub are critical. The state's proactive approach, combined with substantial investments and infrastructure development, positions it favorably in the competitive landscape of semiconductor manufacturing. Furthermore, Malaysia's focus on higher-value sectors like research and development (R&D) and artificial intelligence (AI) is expected to bolster its semiconductor industry, accounting for 7% of global semiconductor trade flows and 13% of global back-end operations. [cb04c515]
Despite a global decline in semiconductor sales by 8.2% to US$527 billion in 2023, Malaysia's electrical and electronics (E&E) exports for January to October 2024 reached RM491 billion, reflecting a 1.5% increase from the previous year. The Malaysian Semiconductor Industry Association (MSIA) anticipates single-digit growth for the industry in the coming year, indicating resilience amid global market fluctuations. [3597ee6d]