KUALA LUMPUR: Malaysia could capture a larger share of the global semiconductor boom by moving deeper into advanced packaging, a segment increasingly critical to artificial intelligence (AI) chips, according to Nomura Asset Management.
The country already has a strong position in semiconductor assembly, testing and other back end activities, but its exposure to advanced packaging remains relatively limited despite advantages ranging from available industrial land, to a skilled workforce, and geopolitical neutrality.
Nomura Asset Management UK Ltd equity research executive director Takeshi Kawamoto described Malaysia as a “Switzerland” of sorts in the technology supply chain, given its ability to maintain ties with both the United States and China.
“Malaysia’s back-end sector is strong. That is why we see Infineon Technologies and Intel Corp here,” Kawamoto told reporters at a briefing yesterday.
“But I would like to see Malaysia become more involved in advanced packaging.”
Malaysia’s electrical and electronics exports have risen at a double-digit pace from a year earlier, which Kawamoto said partly reflects the spillover from strong global demand for AI infrastructure.
Advanced packaging has become increasingly important as chipmakers seek to combine multiple high performance components into increasingly complex systems, particularly for AI computing.
The segment is difficult to enter because of its technological complexity and capital requirements.
Taiwan Semiconductor Manufacturing Co (TSMC), the world’s largest contract chipmaker, has historically kept much of the work in-house.
Capacity constraints, however, are creating opportunities elsewhere.
“They’re slowly outsourcing it now because they are very overbooked at the moment,” Kawamoto said.
“So, they’ve had to spread the wealth. There are definitely opportunities within that area for Malaysia to penetrate,” he added.
Malaysia also has an advantage in the availability of land for large-scale semiconductor facilities, he said.
Even Taiwan, the centre of the global chip manufacturing industry, is continuing to spend heavily to expand production capacity and factory space.
Kawamoto said it was difficult to estimate how long Malaysia would take to close the gap with more advanced semiconductor hubs, but the expected expansion of AI demand provides a window of opportunity.
“We foresee AI growing rapidly in the next three years, so there is still a lot of room to catch up should Malaysia grow bigger in the advanced packaging space,” he said.
Competition for semiconductor investment is intensifying as governments seek to attract global chipmakers and reduce reliance on concentrated supply chains.
Malaysia, Kawamoto said, has several factors working in its favour, including a technology-capable workforce, access to resources, industrial land and government support.
“I’ve seen some of the subsidies that the government is offering to companies here.
“If you dangle enough to show the country is geopolitically safe and law-abiding, who knows, the likes of TSMC could be building here.”
Globally, Nomura Asset Management remains constructive on the semiconductor industry, supported by continued spending on AI infrastructure.
Kawamoto said AI demand is also beginning to broaden beyond the training of large models into inference and enterprise applications, potentially creating a more diversified source of semiconductor demand.
“In our assessment, this is likely to lead to a broader and more sustainable demand base for computing over time,” he said.
Geopolitical tensions could disrupt semiconductor supply chains, while further interest rate increases could weigh on technology valuations and broader economic growth.
“Semiconductor equities may be volatile and corrections should be expected,” Kawamoto said.
“These factors have the potential to affect the value of an investment.”
Nomura Asset Management Malaysia managing director and country head Leslie Yap, meanwhile, said the Nomura Global Syariah Semiconductor Equity Fund has continued to attract assets since its launch in July 2022.
The fund had RM1.2bil in assets under management as of July 31, 2026.
While Malaysia’s semiconductor industry continues to expand, Yap said Nomura does not currently plan to launch a fund dedicated solely to Malaysian semiconductor companies. “I do not know if the industry is big enough in Malaysia to create a semiconductor fund.
“But we will definitely not be doing this in the near future.”
