KUALA LUMPUR: Malaysia’s deal with SoftBank Group Corp-owned British firm Arm Holdings PLC is seen as a strategic move to propel the country up the semiconductor value chain and foster an intellectual property (IP)-based ecosystem, industry experts say.
Rakuten Trade head of equity sales Vincent Lau said the Bursa Technology Index is expected to gain some support from this development with Arm and provide a cushion for the sector amid broader market uncertainties.
The local technology sector has been under pressure, with the technology index down by about 25% year-to-date.
“The collaboration is an ambitious yet positive first step to move up the value chain. It also adds to the ongoing momentum in the technology sector beyond just the data centre theme.
“While market volatility persists, this initiative could provide some stability.
“There are also signs that the technology sector is approaching a bottom, with some stocks having dropped to levels seen during the Covid-19 pandemic period,” he told StarBiz.
Yesterday, Malaysia inked a memorandum of understanding and contract with Arm to establish an ecosystem-wide partnership on semiconductors.
This first-of-its-kind collaboration grants Malaysia access to Arm’s high-performance, power-efficient compute platform, Arm Compute Subsystem (CSS), the flexible licensing programme, Arm Flexible Access, among others.
As part of the deal, Arm will also train 10,000 semiconductor talents.
At the heart of this initiative is the government’s vision to build Malaysia’s first artificial intelligence chips in advanced industries, using a local-first approach at every part of the supply chain.
Further, Arm is also planning to set up an office in Malaysia in support of the government’s mission, which aims to expand outreach to Asean and Australia and New Zealand markets.
Economy Minister Datuk Seri Rafizi Ramli said this collaboration represents a shift from the traditional approach of relying on grants and tax exemptions to attract foreign direct investment into Malaysia’s semiconductor industry.
“For decades, Malaysia has built a robust semiconductor sector by attracting multinational corporations to set up their operations here.
“However, much of this has been focused on back-end processes such as assembly and testing, which account for only 15% to 20% of the total value chain.
“The bulk of the value – around 60% – lies in front-end activities such as chip design,” he said during the panel session, “AI Leadership: The Power of IP Transfer in Malaysia”, at the Strategic Collaboration in Semiconductor Industry yesterday.
Rafizi added that the traditional approach has helped Malaysia become a manufacturing hub.
However, advancing to the next level, one driven by IP and high-value investments, poses significant challenges.
“Relying on local companies to organically develop research and development and IP capabilities would be costly and time-consuming.
“Instead of offering conventional tax breaks and capital subsidies, Malaysia is now using IP as an incentive,” he said.
Malaysia will be spending US$250mil over a decade to acquire Arm’s chip design plans for local manufacturers.
The projected ecosystem impact of one complete Arm CSS lifecycle is about US$30bil.
“I want to see a Malaysian-designed chip enter the global market within the next five to seven years,” Rafizi said.
Malaysia Semiconductor Industry Association President Datuk Seri Wong Siew Hai also applauded the government’s plan, which is in support of the National Semiconductor Strategy launched last year.
Wong said the key challenge moving forward is the plan’s execution and talent. He noted that while the country has talents, there are still gaps in expertise that need to be addressed.
“To bridge this gap, we must bring in foreign expertise, and if Arm can help Malaysia in that aspect, that is good.
“Alongside talent development, market demand is another key factor.
“Do we have customers for locally designed chips?” he asked.
Meanwhile, QES Group Bhd
managing director and president Chew Ne Weng said while the tie-up with Arm will give Malaysia a push towards a higher value chain, the only concern will be regarding the talent pipeline and the stability of energy and water resources if wafer fab foreign direct investment were to come in a big way.
“These are the gaps that the government needs to address quickly. It will not be an easy feat for companies to tape-out (the final design stage before chip manufacturing).
“However, it is achievable by leveraging the expertise of existing integrated circuit design firms and foreign-owned companies.
“A longer runway could be necessary but we need to start somewhere,” he said.
