GEORGE TOWN: The semiconductor industry in the country, including Penang, remains stable despite the prolonged conflict in the Middle East, says Datuk Seri Amir Hamzah Azizan.
The Finance Minister II said the conflict, which has entered its third month, has posed challenges, especially with rising global oil prices and a shortage in supplies of several critical materials for the semiconductor industry.
"There are several important raw materials in the semiconductor industry that have faced supply pressures following instability in the Middle East.
“Global industry players have now begun adjusting their respective supply chains by seeking alternative sources to reduce dependence on conflict-hit regions,” he said during a press conference after visiting the Intel Pelican Project in Bayan Lepas on Monday (May 18).
Amir Hamzah added that some inventories in the semiconductor sector were difficult to procure due to instabilities in the Middle East region, forcing local supply chains to seek new sources.
“For now, the supply situation remains under control. The demand for semiconductors, particularly those related to artificial intelligence (AI) technology, has remained high as well.
“Major manufacturers, including key fabrication plants, possess stronger supply chain ecosystems and are able to adjust their operations quickly to deal with issues arising from the conflict in the Middle East,” he said.
However, he cautioned that smaller companies may face some difficulties because they are not used to dealing with new suppliers.
Meanwhile, Amir Hamzah said Brent crude oil prices have now risen to as high as USD$111 per barrel compared with around USD$65 to USD$70 pre-conflict.
"The situation has directly increased operating costs across various sectors, including global manufacturing and logistics.
“Oil supply is the main issue arising from the Middle East conflict because about 20% of the world’s oil supply comes from that region.
"The main issue is ensuring there is sufficient supply for countries that need it,” he said.
However, he assured that Malaysia remains in control of the situation due to domestic oil production as well as supply guarantees by major petroleum companies, including Petronas.
“In Malaysia, we are fortunate because we have our own oil production as well as operators such as Petronas and other oil companies that help ensure supply stability.
“We have not seen situations such as oil shortages or industries failing to obtain supplies in this country,” he said.
