- Building STEM talent and leveraging AI, key to future competitiveness
- Malaysia aims to move from back-end manufacturing to a full semiconductor innovation hub
As global demand for technology surges, Malaysia’s semiconductor industry, a pillar of our export economy, is moving up the value chain for higher-value growth.
For decades, Malaysia has been a key player in back-end manufacturing, testing and packaging. Yet, as global competition intensifies, and geopolitical tensions threaten semiconductor supply-chains, with the Netherlands-China flare up over Chinese owned chipmaker, Nexperia being the latest example, , there is a growing consensus that the country needs to develop its front-end capabilities especially in chip design..
Three key challenges to overcome
The journey will be tough but not insurmountable with three major challenges: moving beyond back-end manufacturing, strengthening supply chain resilience, and nurturing a new generation of semiconductor talent.
This isn’t just an industry issue or an academic problem; it’s a national priority that demands a holistic approach to building a stronger ecosystem.
2025 Silicon Malaysia Conference
The just concluded 2025 Silicon Malaysia Conference by Malaysia Semiconductor Industry Association (MSIA), with Malaysiakini & Digital News Asia as media partners, focused on how to overcome these three challenges, while calling for expanded capabilities among industry players to innovate and adapt to the challenging global landscape.
Building digital talent
It all boils down to talent. But talent isn’t just found, it’s built. It requires a robust STEM-trained pool aligned with industry needs and eager to meet future demand.
“For a fundamentally tech-driven industry, we definitely need a lot of skilled workers. Therefore, talent development is our number one priority,” Jagdeep Singh Deo, deputy chief minister II of Penang,during his keynote , urging industry players and learning institutions to accelerate partnerships through research collaborations, internships, and the sharing of resources and facilities – to drive innovation and economic growth.
Bringing together industry leaders, technology experts and other stakeholders, the crucial event held on 4th Nov at Spice Arena, Penang, took an in-depth look at Malaysia’s position in the global semiconductor ecosystem, with future-ready initiatives in mind.
Moving from manufacturing to innovation
For Malaysia to successfully transition from a manufacturing base to an innovation-driven hub, the country needs to move up the value chain for greater economic gain and competitive edge.
Expanding on this, Wong Siew Hai (pic), president MSIA said: “For Malaysia to thrive, the nation must leverage its manufacturing strength to become a leader in semiconductor innovation to safeguard the future of Malaysia’s semiconductor sector.”
Riding on Malaysia’s strong position in assembly, testing, and packaging, MSIA is pushing for ecosystem strengthening, R&D, and talent development.
“Building deeper local supply chains, supporting local SMEs, and encouraging more R&D investment to reduce reliance on imported technologies – is key to creating a more integrated, self-sufficient and resilient semiconductor industry,” he added.
AI emerging as a real game-changer
AI is no longer just a buzzword, it has become the defining force behind the next wave of industrial transformation. It plays a crucial role in every stage of the semiconductor value chain, from chip design and process automation to quality control and predictive analytics.
From a global standpoint, Vejay Kumar, (pic) vice president of Worldwide Manufacturing at Penguin Solutions (formerly SMART Modular Technologies), affirmed that although Malaysia remains a vital link in the global semiconductor supply chain, the nation must not be complacent, especially with AI emerging as a game-changing technological driver.
“While AI algorithms are crucial, the real value actually comes from applying AI in ways that drive tangible industrial transformation,” he pointed out, noting that many companies, especially SMEs, still lag in AI deployment as a strategic priority.
“Instead of debating on AI replacing humans, the real conversation should be shifting towards how humans and AI can work together, using AI as a super practical, and productive tool to enhance human intelligence, creativity and problem-solving,” he added. Indeed, such a mindset has to become embedded in the workforce, in order to accelerate AI transformation.
AI and cloud computing are a necessity
The combination of AI and cloud computing allows companies to harness massive computing power and real-time analytics without being constrained by physical infrastructure. But again, we need a strong talent pool and industry readiness to achieve such ambitions.
Catherine Lian (pic), vice president and executive technology leader at IBM Asean, underscored the importance of forging a triangulation between academia, government and industry – to ensure Malaysia develops a strong and sustainable talent pipeline for its semiconductor and AI-driven economy.
“Take AI technology for example, developing the talent revolving around it is a necessity, not a choice,” she said, stressing upon the urgency of working on such long-term ecosystem strategies, from consistent policies to academia support, hand in hand.
“To keep pace with the rapidly evolving semiconductor and AI sectors, we need universities to come up with future-ready modules, while industries provide applied learning opportunities, and with government policies that encourage continuous reskilling and so forth.”
“It’s not just about filling jobs, it’s about building a consistent and sustained pool of digital talent to drive innovation and strengthen our competitive edge,” she said, highlighting AI and hybrid cloud tech skills as part of a vital blueprint for moving up the semiconductor value chain.
The 2025 Silicon Malaysia Conference, which attracted delegates from ASEAN countries as well, offered a rich blend of panel sessions, high-level industry insights, and productive networking, focusing on innovation in semiconductor, industry supply chains, AI, cloud computing, and talent development.
The conference was held alongside the Automex Penang 2025, which featured over 80 booths from corporate partners showcasing their latest technologies.
According to Gerard Leeuwenburgh (pic), country general manager of Informa Markets Malaysia, bringing Automex to Penang is more than a strategic expansion as it reflects a deep commitment to Malaysia’s semiconductor ecosystem.
“Penang contributes nearly 30% of Malaysia’s electrical and electronics (E&E) exports and hosts over 350 multinational corporations alongside thousands of SMEs. This robust industrial ecosystem, backed by strong policies and skilled talent, makes the state an ideal choice for Automex’s expansion,” he said, lauding the northern state as the Silicon Valley of the East, where automation, semiconductors, and smart manufacturing converge.
In 2024 alone, Penang secured over US$7.20 billion (RM30 billion) in approved manufacturing investments, with global automation giants like M.A.i, KUKA Robotics, and HP Inc. stepping up their presence through continued expansion.
“With the global industrial automation market valued at US$178 billion (RM741.99 billion) in 2023 and projected to almost double by 2031, the stage is set for a new wave of technological adoption and industrial transformation unlike any before,” Leeuwenburgh noted.
On a closing note, Wong aptly summed up that Malaysia’s semiconductor journey is entering a new chapter that calls for accelerated, concerted efforts from all stakeholders. The conference solidified this vision, highlighting the country’s evolution from a manufacturing powerhouse into a rising hub for innovation.
Taking inspiration from the ‘Made by Malaysia’ theme of the conference, he urged industry players to accelerate their effort towards creating a resilient ecosystem, saying: “As we gather here, it truly reflects our ambition to lead, not only in what we manufacture, but in what we can design, develop, and imagine.”
