Rafidah: Chips industry poised for double-digit growth

  • Business
  • Wednesday, 25 Jun 2003


THE semiconductor industry, a major driving force within the electronics sector, is expected to return to double-digit growth this year after going through a severe downturn for more than two years, said International Trade and Industry Minister Datuk Seri Rafidah Aziz. 

In the first quarter this year, Malaysia's exports of semiconductor products surged 30.4% to RM14.7bil compared with the corresponding period last year, she noted. 

And the global semiconductor market was projected to grow by 19.8% in 2003 and by 21.7% in 2004, Rafidah added, quoting figures from the US-based Semiconductor Industry Association (SIA). 

The association also forecast the Asia-Pacific market would be the leader in regional semiconductor consumption, with a growth rate of 23.6% this year, compared with 13.5% for the United States, 17.6% for Europe and 21.6% for Japan. 

“The electronics industry is currently experiencing a slow recovery from the severe downturn in demand for semiconductor products, which started from late 2001,'' Rafidah said in her keynote address at the National Seminar on Opportunities in the Electronics Industry (Nepcon) in Seri Kembangan yesterday. 

The four-day seminar and workshop is being held in conjunction with the 7th Microelectronics Malaysia and the 5th Smitech Malaysia. 

Rafidah said that over the last three decades Malaysia had transformed itself into a major producer and exporter of manufactured goods and that the export-oriented electronics sector had been the driving force behind the country's export success. 

She said the remarkable performance of the sector was testimony to the confidence that multinational corporations (MNCs) had in Malaysia's investment climate, as reflected by their continued presence in the sector. 

“Within the semiconductor industry, for example, most of the major MNCs have already made Malaysia their production base,'' she said. 

In the first four months this year, 79 electrical and electronics (E&E) projects were approved, with capital investments amounting to RM2.2bil, compared with 178 projects worth RM5.7bil last year. 

And between 1998 and April this year, 1,122 E&E projects were approved, with capital investments of RM39.8bil. Foreign investments accounted for 82.7% of the projects, Rafidah said. 

Apart from new investments, there were also significant re-investments in expansion and diversification projects during the period to April this year. 

These were mainly for the upgrading of the sector, including investments in new and advanced technologies and products, expansion into higher value-added activities, research and development (R&D), product design, marketing, distribution, procurement and other support functions such as call centres. 

Later, Rafidah said the government had identified photonics as a new area to be promoted, and had allocated RM140mil for photonic-related R&D activities with information and communications technology (ICT) applications under the Eighth Malaysia Plan 2001–05. An additional RM100mil had been set aside to help private companies finance the training of R&D personnel. 

As of May this year, 26 projects had been approved: three in photonic devices/equipment, eight in opto-electronics, and 15 in optical fibres and cables, Rafidah said. 

She said Malaysia's relatively young photonic sector had benefited from the presence of MNCs. Some local companies had also ventured into photonics and related products. 

China was seen by most electronics companies worldwide as an opportunity, Rafidah said, adding that Malaysian companies should hence view it as a potential huge market for their products, rather than as a competitor. 

She urged local companies to use China as their production base for labour intensive products targeted for the export market, although Malaysia was still competitive as a manufacturing hub for high-end electronics products. 

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