GEORGE TOWN — The RM 1 billion investment pledge by Khazanah Nasional Berhad for the local semiconductor industry will help local firms in Penang scale up their business and be more resilient to global shocks, industry groups said.
The investment pledge by the government-linked investment company (GLIC) was announced by Prime Minister Datuk Seri Anwar Ibrahim in the Budget 2025 unveiled last Friday.
Malaysia Semiconductor Industry Association (MSIA) president Datuk Wong Siew Hai said the capital injection from Khazanah would help local semiconductor firms, both in Penang and nationally, expand their manufacturing capabilities and adopt advanced technologies.
The funds will also help firms boost research and development (R&D) efforts.
“(These are) critical in maintaining the local firms’ competitiveness in the fast-evolving global semiconductor market.
“As Malaysia continues to be a key hub for the global semiconductor sector, this investment will enable local firms to scale (up) their operations and meet increasing global demand, (as well as) positioning them to capture more opportunities in the global supply chain,” he told Scoop.
Christina Tee of the Malaysian International Chamber of Commerce and Industry (MICCI) said the investment could also help strengthen local supply chains as well as foster talent development.
“This translates into greater access to cutting-edge technology (and) improved infrastructure.
“Penang, as a key regional semiconductor hub, will see its firms equipped to compete more effectively on the global stage, driving innovation and opening new market opportunities, particularly in high-growth areas such as AI, 5G, and advanced manufacturing,” the chamber’s president told Scoop.
Global market shocks
The global semiconductor industry, which is projected to become a trillion dollar industry by 2030, is facing several disruptions such as vulnerable shipping routes due to climate change and conflicts, trade wars, sanctions, and export controls.
Tee said Khazanah’s investment would help position local firms in the “high-value segments of the market”, thus making them more resilient to global market shocks.
“By enhancing capacity, efficiency, and technological innovation, Malaysian firms will not only meet growing international demand but also become key contributors to the global semiconductor value chain.
“This investment is key in reinforcing Malaysia’s position as a regional leader in high-tech manufacturing and innovation,” she added.
Khazanah’s investment pledge is part of the GEAR-uP programme, which will see the six leading GLICs collectively invest RM120 billion in domestic direct investments (DDI) over the next five years, on top of RM440 billion in public market investments.
According to the Ministry of Finance (MoF), these investments are primarily directed towards high-growth high-value (HGHV) industries such as the energy transition sector, advanced manufacturing especially in the semiconductor space, investments across all life cycles of firms from start-ups, venture capital to mid-tier companies and finally to support listing of such companies.
Talent crunch
Both Wong and Tee pointed out that the local semiconductor industry is facing a talent crunch which involves engineering and other technical talents.
Wong said the number of students pursuing science and engineering is dropping while at the other end, local firms are losing technical talents, especially engineers to neighbouring countries.
Conversely, Tee highlighted that Malaysia has an urgent need for skilled engineers and a highly capable workforce, particularly in sectors like semiconductors, advanced manufacturing, and technology.
To close this gap, investments in education, vocational training, and upskilling programs, especially in technical fields like engineering, artificial intelligence (AI), robotics, and automation, are critical.
Additionally, Tee said that the local semiconductor firms in Penang and nationally face limited access to advanced technologies and high costs of scaling production as well.
“Therefore, Khazanah’s investment would provide capital to enhance these firm’s technological capabilities, boost their production capabilities and help them to attract global talent.”
Meanwhile, Wong said any investments that support workforce training and retention are crucial for future growth of the local semiconductor scene.
“Khazanah’s investment provides local players with the financial support needed to address barriers to (their) growth,” he added. – October 23, 2024