KUALA LUMPUR: Putrajaya is prepared to court foreign players to build semiconductor wafer fabrication facilities in Malaysia if local companies are not yet ready to make the leap.
Calling for more foreign investments into the space, Investment, Trade and Industry Minister Datuk Seri Johari Abdul Ghani cited Infineon Technologies as a key example.
Infineon Technologies has invested about £7bil (over RM30bil) in its Kulim Hi-Tech Park facility in Kedah to build the world’s largest 200mm silicon carbide power semiconductor fab, producing chips for electric vehicles, renewable energy and industrial applications.
The project, which includes a completed first phase and a planned but currently postponed second expansion phase, elevates Malaysia’s role in the global semiconductor supply chain by shifting the focus toward high-value front-end wafer fabrication.
Johari said Malaysia is now determined to move higher up the semiconductor value chain, after decades of strong footprint in the back-end space.
“We are accelerating our push into integrated circuit design, advanced packaging, and research and development.
“We are investing into our domestic ecosystem to provide a conducive environment that can support and encourage growth of our local companies across the value chain,” he said during the Semicon South-East Asia (Semicon SEA) 2026 event yesterday.
Johari noted that Malaysia’s semiconductor sector continues to draw foreign investment interest, as global firms look to diversify supply chains amid geopolitical tensions and capitalise on the industry’s rapid expansion worldwide, now projected to surpass US$1 trillion in value.
“Many companies are keen to proceed with their investment into Malaysia, notwithstanding geopolitical uncertainty.”
Johari added that his ministry will continue to engage with investors who are taking a wait-and-see attitude following the Middle East conflict.
In his opening speech, Johari said Malaysia provides manufacturing depth, a skilled and dependable workforce, and importantly, a position of neutrality.
When asked about developments related to the deal that Malaysia has with Arm Inc, in which the government has paid RM1.11bil to licence its high-end chip design blueprints and compute subsystems (CSS), Johari confirmed that domestic companies have already received the tokens.
“Three CSS tokens out of seven that we have licensed have been given to some of the industry players, on condition they cooperate with the local companies,” he said
Johari added that about five companies have been allocated another set of basic Arm tools.
It is understood that a major signing ceremony related to the Arm CSS tokens is expected to take place in a week’s time.
Meanwhile, Malaysian Investment Development Authority (Mida) noted a steady increase in enquiries since last year, particularly from semiconductor companies based in Singapore and China.
“The country’s neutral geopolitical positioning, coupled with its established manufacturing base, has made it an attractive destination for semiconductor investments as companies seek greater supply chain resilience.
“The China Plus One strategy remains highly relevant,” Mida investment development deputy chief executive officer Zuaida Abdullah told StarBiz on the sidelines of the event.
Mida’s chief executive officer Datuk Sikh Shamsul Ibrahim added in a statement that the semiconductor industry is at an inflection point, and Malaysia intends to be at the centre of what comes next.
“Malaysia is not simply maintaining our position in the global semiconductor supply chain, we are deliberately reshaping it.
“The New Industrial Master Plan 2030 sets a clear direction for the electrical and electronics (E&E) sector to move beyond assembly and test into design, advanced packaging and innovation-driven manufacturing, and Mida is here to make that transition real.
“The RM28.5bil secured by the E&E sector in 2025 is proof that global confidence in Malaysia has not wavered.
“What we are now building is the ecosystem to match that confidence, through supply chain integration, local capability development and the kind of high-value partnerships that platforms like Semicon SEA are uniquely placed to catalyse,” he said.
Global industry association Semi president and chief executive Ajit Manocha said when he pointed out in 2017 that the industry would reach US$1 trillion in revenue by 2030, people had questioned his projection.
“Fast forward to today, and we are already talking about a multi-trillion-dollar future. In 2025, the industry closed at about US$780bil in revenue.
“When we initially projected US$1 trillion by 2030, it seemed ambitious — but we now expect to reach that milestone as early as 2026, four years ahead of schedule.
“This growth is being driven by multiple waves—first was the Internet of Things, now artificial intelligence (AI), and eventually quantum computing.
“AI infrastructure alone could represent a US$5 trillion opportunity by 2030, with compute demand expected to increase five-fold. This is fuelling investment across the entire semiconductor ecosystem,” he said.
Ajit added that by 2029, there are expected to be 89 new wafer fabrication plants, with around 70 already in various stages of construction or production.
“Regionally, 16 of these wafer fabs are expected to be built in the United States, nine in Europe, and 64 in Asia. However, South-East Asia accounts for only six fabs,” he said.
To this end, Ajit said South-East Asia has an opportunity to capture a larger share of the next wave of semiconductor investments, particularly as more fabs are expected to be built by 2035.
“The region must act now to position itself as a key hub in the global semiconductor supply chain,” he said.
