PETALING JAYA: Under the Budget 2027, Khazanah Nasional Bhd and the Retirement Fund (Incorporated) or KWAP are expected to invest RM1.2bil to help local semiconductor companies move into higher-value segments.
There is also follow-up equity investment for startups via Malaysian Technology Development Corp’s SemiconStart programme.
Additionally, Khazanah together with InvestPenang will also establish a RM100mil fund to support early-stage semiconductor and advanced manufacturing companies.
Industry observers say these investments sound beneficial in theory, but the long-term impact is left to be seen.
Trident Analytics Sdn Bhd research analyst Peter Lim Tze Cheng said chip development is a long gestation process and needs “a lot more than just capital”.
“It needs many elements to make it work – these include existing value chain support, talent pool and access to foundries, to name a few,” he told StarBiz.
“When we want to develop local technology, we must also be clear which segment of technology we want to develop – is it chip design, which type of chip, foundry, advanced packaging, testing equipment, which one? We must know what we want first. That’s the first step,” Lim said.
He reckons what Malaysia needs is a clear strategy and roadmap to really bring up Malaysia’s semiconductor sector, and not just “money-throwing headlines”, hoping something good will eventually materialise.
Another analyst said the proposed RM1.2bil investment by Khazanah and KWAP, together with the RM100mil fund established by Khazanah and InvestPenang, could help local semiconductor companies expand their capabilities, improve competitiveness, and reduce dependence on foreign technology.
“However, the key is how effectively the funds are deployed.
The government must ensure that funding reaches local companies and startups with real potential, develops skilled local talent, and generates sustainable commercial returns rather than simply increasing investment spending.”
He said if there is proper deployment, these initiatives could strengthen Malaysia’s position in the global semiconductor supply chain.
“It can also create higher-paying jobs, and help local companies develop their own technologies and intellectual property,” he said.
On the whole, the investments, when materialised, have the potential to boost the overall economy, but its success should be measured by tangible outcomes such as stronger local companies, technological advancement, higher-value exports, and better-paying jobs, and not merely the amount of funds invested, he reiterated.
The Semiconductor Industry Association said this week that global semiconductor sales were US$159.7bil during the month of August, an increase of 8% compared to the July total of US$147.9bil and 144.3% more than the August 2025 total of US$65.4bil.
