Malaysia Targets Higher Semiconductor Value Chain with Design and Advanced Packaging Push

Malaysia is accelerating its semiconductor ambitions through IC design, advanced packaging and stronger policy support, aiming to capture greater value while strengthening competitiveness amid growing global AI demand.

Malaysia Advances Semiconductor Value

Malaysia is intensifying efforts to move up the global semiconductor value chain by expanding into integrated circuit (IC) design and advanced packaging, as policymakers and industry leaders seek to capture greater economic value from the country’s well-established electronics and electrical (E&E) sector.

Discussions at The Edge-HSBC E&E Symposium 2026 highlighted that while Malaysia handles about 13% of global semiconductor assembly, testing and packaging outside China and Taiwan, it captures only around 6% of total semiconductor value-add.

The country’s E&E industry contributes roughly 40% of national exports but only 6% to 7% of gross domestic product, reflecting its concentration in lower-value manufacturing activities.

Deputy Finance Minister Liew Chin Tong emphasised the need for Malaysia to progress beyond its traditional outsourced semiconductor assembly and test (OSAT) role by strengthening capabilities in chip design, intellectual property development and advanced packaging technologies.

A major initiative supporting this transition is the Malaysia Advanced Packaging Consortium (MAPC), launched in May 2026 with RM92 million in government funding matched by RM93 million from industry partners.

The consortium aims to develop a pilot high-bandwidth memory (HBM4) advanced packaging line over the next two years, involving participants across chip design, packaging research, testing and automation.

Industry participants also identified talent retention rather than talent availability as the sector’s biggest challenge. Speakers noted that many skilled Malaysian engineers continue to seek better-paying opportunities in Singapore and Taiwan.

Proposed measures include extending work permits for foreign STEM graduates, improving housing incentives in semiconductor hubs and making employee share ownership schemes (ESOS) tax deductible to help companies retain skilled workers.

Another positive development highlighted during the symposium was the successful listing of SkyeChip on Bursa Malaysia. The Penang-based AI and memory chip designer raised approximately RM352 million through an IPO that was oversubscribed by around 95 times, with 60% of proceeds allocated to research and development.

The listing was viewed as evidence that Malaysia’s strategy to nurture homegrown semiconductor companies is gaining traction.

Industry leaders also stressed that Malaysia’s reputation for neutrality, intellectual property protection and reliable operations has become an increasingly valuable advantage amid ongoing geopolitical tensions and global supply chain diversification.

Apex Research maintained its OVERWEIGHT recommendation on Malaysia’s technology sector, citing a favourable long-term outlook supported by artificial intelligence-driven semiconductor demand, stronger earnings momentum and continued policy support.

The research house retained its positive ratings on Mi Technovation, EG Industries and ViTrox as its preferred investment picks.

Source: Apex Research