PETALING JAYA: Malaysia has yet to fully capture the dividends from the global artificial intelligence (AI) upcycle and could stand to gain more by moving into higher-value segments such as advanced packaging.
Berjaya Research head of research Kenneth Leong said it sees advanced packaging as one of the “most credible opportunities” over the short to medium term for the country to move up the semiconductor value chain.
This is supported by its established backend ecosystem, skilled workforce and strong relationships with global semiconductor players.
“Beyond packaging, other segments like semiconductor equipment, testing, materials, power management and data-centre infrastructure offer attractive opportunities that build on Malaysia’s existing manufacturing capabilities,” he told StarBiz.
Leong said he sees the current and coming years as an initial acceleration phase for the chip sector, as investments under the National Semiconductor Strategy (NSS) and AI-related capacity expansion begin to translate into higher-value activities.
According to Leong, however, a “meaningful” move up the value chain could require a longer gestation period of five to 10 years, with near-term opportunities centred on advanced packaging, semiconductor equipment, testing and supporting infrastructure before the country gradually progresses towards more design- and IP-intensive segments.
“We believe Malaysia has yet to fully capture the structural economic benefits of the AI upcycle.
“To capture a greater share of this value, Malaysia needs to deepen its domestic semiconductor ecosystem, strengthen research and development (R&D) capabilities, develop specialised talent and increasingly link investment incentives to technology transfer and local value creation,” he said.
Apex Securities Research said there are two key constraints for the country to move up the value chain.
Firstly, the semiconductor industry is highly sophisticated, with upstream customers prioritising product quality, reliability and a proven track record.
The research house said for local players, investing in R&D to develop new products carries considerable risk, as it remains uncertain whether the products will meet their clients’ qualification requirements.
As such, local players tend to focus on sharpening their capabilities in their respective areas of specialisation, rather than venturing into new areas.
“Secondly, the semiconductor ecosystem tends to develop along the value chain in close proximity. Taiwan is a case in point, with its strong wafer fabrication base supporting the development of an adjacent advanced packaging industry.
“Malaysia’s lack of a comparable front-end anchor could present an additional barrier to developing higher-value activities such as advanced packaging.
“That said, Intel’s US$7bil investment in Malaysia, including high-end 3D packaging in Penang, is a positive step towards moving Malaysia into higher-value segments,” Apex Securities said, following its recent visit to five tech companies, namely 3REN Bhd, QES Group Bhd
, AMS Advanced Material Bhd, MI Technovation Bhd and Ambest Group Bhd.
The research house said initiatives like the NSS and the Malaysia Advanced Packaging Consortium could help address the constraints arising from the country’s concentration in lower-value segments of the semiconductor value chain.
It said the consensus among most tech companies’ management is that the upcycle remains in its early stages.
This is evident from the healthy orderbook growth across all five companies the research house visited, with several already fully booked and deliveries extending into 2027, while some are planning capacity as far out as 2028.
