Malaysia Semiconductor Industry Association president Datuk Seri Wong Siew Hai says to enhance the country's position in semiconductors, we need to realise that there is an ongoing global war for talent.
MALAYSIA’S success story in the global semiconductor industry is the result of the effort put in since the 1970s.
The country is now the world’s sixth-largest semiconductor exporter, and packages 23% of all semiconductor chips that enter the US market, the New York Times reported recently.
This success is attributable to the talent base and ecosystem of semiconductor companies which have continued to make Malaysia a global player.
Such is Malaysia’s stature that many semiconductor multinational companies (MNCs) have invested in Malaysia, bringing their latest technology to be tested for engineering runs before production starts at their other facilities.
This is also why these MNCs have Malaysian engineers playing leading roles in new facilities they are building abroad.
The industry continues to grow. Projections for the global semiconductor industry are that it will grow from US$575bil (RM2.71 trillion) in 2022 to US$1 trillion in 2030.
Malaysia’s total electrical and electronics (E&E) exports amounted to RM593bil in 2022, about two-thirds of which were semiconductor-related products.
Will this semiconductor boom in Malaysia continue?
The industry is being driven by developments in artificial intelligence (AI), automotives, cloud computing, quantum computing, and even consumer products which will have more chips embedded in them.
Many new wafer fabs are being built around the world and existing ones are expanding. Major players have announced growth plans in Malaysia. Intel, Infineon, AT&S, Texas Instruments, Ericsson, Bosch, Lam Research and even Nvidia are among the big names.
Most of this increased capacity will come onstream from next year.
Will Malaysian companies in the ecosystem be ready to take on these new opportunities?
We need to improve capacity and semiconductor-related infrastructure to support this projected growth over the next six to seven years.
Malaysia does not have a strong integrated circuit (IC) design base of companies as a result of the focus on foreign direct investment (FDI) in semiconductors over the last 50 years.
Taiwan, South Korea, and Japan, on the other hand, have focused on building up their own capacity and intellectual property.
Hence, the focus has been on attracting FDI rather than building our own local semiconductor industry. We need to shift our focus to local capabilities and nudge some of our companies to become global champions.
Government policies should encourage our local talent to make the necessary investments by focusing on this issue. FDI is crucial, but we also need to create champions in IC design in parallel.
Malaysia should not build its own wafer fabrication plants as it was tried previously and didn’t work. It is a capital-intensive business and we do not have the know-how.
Thus, Malaysia needs to attract foreign companies to set up their wafer fab plants here. We have a few but they are small. If we can attract wafer fab FDIs, we will have a complete ecosystem in the semiconductor industry.
To enhance Malaysia’s position in semiconductors, we need to realise that there is an ongoing global war for talent.
Every country in this industry says it is short of talent. One example is when TSMC cited the shortage of skilled workers for pushing back its production start date at its Arizona factory.
Singapore takes many engineers from Malaysia. About 15% of our talent leaves our shores.
How are we going to close that hole? We need to use other countries’ talent. Everyone else is doing it. US, Taiwan and China companies come here to hire our talent.
Malaysia is too oblivious to this and is hesitating. Other countries are not worried about having foreign talent coming to their shores.
That is simply because in total, the jobs in your country will continue to grow with the entry of the foreign talent as the business grows.
The country will benefit a lot more from having the right foreign talent than limiting their entry.
This article first appeared in Star Biz7 weekly edition.
