Can China-US Tensions Propel This Country With A Rich Semiconductor Heritage As The Next Chip Superpower?

In the middle of an escalating U.S.-China tech war, Malaysia has become a significant hub for semiconductor manufacturing, attracting major global players.

What Happened: As the U.S.-China tech war intensifies, Malaysia has emerged as a critical location for semiconductor manufacturing. The country’s well-established infrastructure and skilled labor force have made it an attractive destination for global chip firms, reported CNBC.

Malaysia’s expertise in the “back end” of the semiconductor manufacturing process, including assembly, testing, and packaging, has been a key factor in its growing importance. Major chip firms, including Intel Corp INTC, GlobalFoundries, and Infineon, have made significant investments in Malaysia.

Intel, for instance, has invested over $7 billion in a chip packaging and testing factory in Malaysia, with production set to commence in 2024. GlobalFoundries has also established a hub in Penang, while Infineon is set to build a third wafer fabrication module in Kulim.

"Our decision to invest in Malaysia is rooted in its diverse talent pool, well-established infrastructure, and robust supply chain," said Aik Kean Chong, Intel Malaysia's managing director, according to the report.

According to the Malaysian Investment Development Authority, Malaysia’s share of the global market for chip packaging, assembly, and testing services stands at 13%. The country’s semiconductor exports increased by 0.03% to 387.45 billion Malaysian ringgit ($81.4 billion) in 2023 despite weak global chip demand.

"Malaysia and Asia in general is poised to benefit from the China-U.S. tech war, where access to advanced semiconductor chips are being weaponised as a tool to establish global technological supremacy," said May-Ann Lim, director of the data governance practice at public policy consultancy Access Partnership.

See Also: Elon Musk’s Potential Repeat Of Dogecoin Move Prompts Crypto Analyst To Say, ‘In Before He Runs It Back’

Malaysia’s strategic location and skilled labor force have made it a preferred destination for chip firms looking to diversify their operations amid the U.S.-China tech war. However, the country’s brain drain remains a significant challenge as skilled workers leave for better opportunities abroad.

Why It Matters: The U.S.-China tech war has triggered a global shift in the semiconductor industry, with countries like Japan and Singapore emerging as key players. Taiwanese chip companies are increasingly expanding their operations in Japan, reshaping the global semiconductor industry.

Meanwhile, Singapore’s state-owned investment firm Temasek is in talks with artificial intelligence (AI) developer OpenAI about investing in the company, indicating Singapore’s growing importance in the global tech landscape.

However, the global semiconductor industry faces potential disruptions, such as the recent earthquake in Taiwan, which could impact chip production and, in turn, the progress of AI, as highlighted by tech analyst Gene Munster.

Amid these developments, Taiwan Semiconductor TSM is considering expanding its advanced chip packaging capacity in Japan, a move that could significantly impact the global semiconductor industry.

Read Next: Jeff Bezos Convinced His Siblings To Invest $10K Each In His Online Startup Called Amazon — Here’s How Much Their Investment Is Worth Now

Image Via Shutterstock