KUALA LUMPUR: Malaysia’s electrical and electronics (E&E) sector is projected to recover strongly from the onslaught of the pandemic, spurred by the bright growth prospects of the global semiconductor industry.
To avoid being left out, International Trade and Industry Deputy Minister Datuk Lim Ban Hong is urging local companies to reorientate and innovate their businesses.
“The Covid-19 pandemic has battered our economy and disrupted industry supply chains, including the E&E sector, particularly with the onset of the third wave of infections.
“I believe towards the end of the year and beyond, we will witness a stronger recovery of the economy and promising prospects of the semiconductor industry,” he said when officiating the virtual Malaysia Semiconductor Industry Association (MSIA) National E&E Forum 2021 yesterday.
Lim said a sustainable and long-term recovery would hinge on businesses being able to practise reorientation and innovation.
“This calls for businesses to quickly redeploy talent, launch new business models, enhance productivity, and develop more medium and long-term strategies to be prepared for the new normal.
“I believe that the synergistic efforts of the government and industry associations will facilitate greater research and development collaboration and catalyse new innovations in semiconductor technology.”
The Malaysian E&E sector has been a major contributor to the economy.
“For decades, the E&E sector has been the country’s largest export earner. It continues to be the key driver of industry development and in 2020, contributed 5.6% to gross domestic product (GDP). Today, Malaysia is the largest semiconductor trading partner of the United States.
“As a prominent player in the semiconductor supply chain, the E&E sector in 2020 contributed RM386.29bil or 39.4% to Malaysia’s annual exports, which was 3.5% higher than the previous year.
In terms of productivity, Lim noted that the E&E sector registered a 4.5% growth in 2020, the highest among the other priority sectors.
“Approved investments for the E&E sector in 2020 was at RM15.6bil for 148 E&E projects. These projects are expected to create 19,541 jobs.”
Under the 12th Malaysia Plan (12MP), the E&E sector is targetted to contribute RM120bil to GDP and generate RM495bil in export earnings by 2025.
E&E sector players will be encouraged to adopt advanced technologies and produce more sophisticated products, resulting in higher productivity and growth.
Lim said the E&E sector, with its prominence under the 12MP, will boost economic growth through high value-added products and quality investments.
“We also aim to mitigate the current challenges of the E&E sector by leveraging advanced technologies, digitalisation and niche capabilities. These measures resonate with our current efforts to realign E&E growth in a sustainable trajectory, as well as strengthening Malaysia’s position in the global supply chain.
“This is also in line with the new national investment policy framework being formulated, which is to be the preferred investment destination for high economic investments.
Meanwhile, Malaysia Semiconductor Industry Association president Datuk Seri Wong Siew Hai said Malaysia is a significant part of the global semiconductor chain.
“Approximately 7% of total semiconductor trade goes through Malaysia.”
Citing the World Semiconductor Trade Statistics, Wong said the worldwide semiconductor industry is expected to grow by 25% this year and 10% in 2022.
“It is anticipated to grow to US$551bil (RM2.3 trillion) in 2021 and US$606bil (RM2.5 trillion) in 2022. The outlook for the semiconductor industry continues to be positive.”
Meanwhile, Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed said that the increased participation of local companies in the E&E industry value chain would further improve Malaysia’s trade performance and reduce currency outflow moving forward, Bernama reported.
He added that more and more local companies have started their business after gaining technical expertise and know-how while serving multinational companies (MNCs).
“For the past 50 years, we have been successful in creating a comprehensive E&E ecosystem, particularly for front-end to back-end semiconductor manufacturing activities. A large number of MNCs have established their operations here, including industry giants such as Intel and ST Micro.
“Malaysian companies, too, have been part-and-parcel of the industry, providing products and services required by MNCs (and) being very much part of the global value chain,” he said in his closing remarks at the forum.
Organised by MSIA, the National E&E Forum 2021, themed “Fuelling the Semiconductor Renaissance,” is aimed at bringing experts from Malaysia and overseas to discuss the challenges faced by the industry and how Malaysia can continue to grow the E&E sector and move up the value chain.
Meanwhile, TA Securities in a recent report said global semiconductor sales in August climbed 3.3% month-on-month and 29.7% year-on-year to a record high of US$47.2bil (RM197bil).
“Effectively, the chip sector remains in a robust upcycle with 19 consecutive months of year-on-year growth.
“According to the Semiconductor Industry Association, the sustained strong growth in August 2021 was driven by all regional markets and major product categories, as the industry continued ramping up production to meet robust demand,” it said.