THE growth of Penang’s manufacturing sector is expected to be modest and uneven this year, as companies focus on upgrading existing facilities rather than building new factories.
Federation of Malaysian Manufacturing Penang branch chairman Datuk Seri Lee Teong Li said most manufacturers were reinvesting in their plants, upgrading equipment and adopting new technology.
“There will be more focus on improving efficiency and competitiveness,” he said.
“Factors such as investment approvals, export performance, factory utilisation and spending on equipment and upgrades are closely monitored, as they clearly show the level of business confidence, especially among multinational companies and established local firms.”
Lee said external factors such as the recovery of global semiconductor demand, interest rate trends and geopolitical developments would influence the sector’s performance, as these affect how quickly companies make investment decisions.
“At the factory level, one clear trend is the growing use of automation and artificial intelligence.
“Companies are using smart systems to check product quality, predict machine breakdowns and improve production efficiency,” he said.
Lee said this shift was about boosting productivity and keeping costs under control, rather than hiring large numbers of workers.
“As a result, manufacturing output in Penang is expected to grow at a moderate, single-digit rate in 2026, following the gradual recovery of the global electrical and electronics (E&E) sector.”
Meanwhile, he said job growth would be more selective.
“There is still demand for skilled workers such as engineers and automation specialists.
“But labour-intensive jobs will continue to face pressure as technology becomes more widely used,” said Lee.
Despite the challenges, recent figures point to continued confidence in Penang.
In the first half of 2025, Penang secured about RM12.5bil in approved manufacturing investments, representing around 18% to 20% of the nation’s total manufacturing approvals.
This has translated to roughly 11,100 new jobs, mainly in skilled roles.
“Overall, Penang is entering 2026 on stable ground. We may not see spectacular growth, but the fundamentals remain strong,” said Lee.
“The state remains a key player in the global semiconductor and E&E supply chain.”
