Weekly Sharing #July. 15 Is Malaysia's emergence as a hotspot for semiconductors?

Analysist bets that the US Federal Reserve (Fed) will cut interest rates in September as the price index (CPI) was reported lower than the expectation

Event to watch: 16 July US retail sale US core retail sales, 17 July US Crude oil inventory, 18 July US Philadelphia Fed Manufacturing Index.

The outlook of Malaysia has become a powerhouse in data centers and Johor Bahru was rated as the fastest growing data center market in Southeast Asia.

As tensions rise between China and the United State

Event to watch: 19 July MY Import, Export & Trade Balance, 19 July MY GDP.

Theme of the week

Malaysia's emergence as a hotspot for semiconductor firms amid U.S.-China chip tensions is due to several strategic advantages. Malaysia controls about 13% of global chip packaging, assembly and testing services, according to the Malaysian Investment Develpment Authority, making it the world’s sixth-largest exporter of semiconductors. Here's an in-depth look at the reasons behind this trend and the potential beneficiaries.

Few months back, Malaysian Prime Minister Anwar Ibrahim speaks to attendees at the Semicon Southeast Asia 2024 conference during the Malaysia International Trade and Exhibition Center in Kuala Lumpur mention that Malaysia will allocate 25 billion ringgit (U.S. $5.3 billion) to train 60,000 local engineers and expand the domestic semiconductor industry as the country seeks to become a neutral, global chip-making hub amid U.S.-China tensions.

Malaysia's geographic position in Southeast Asia places it at a strategic crossroads for global trade routes, facilitating easy access to key markets in Asia, Europe, and North America. Other than that, Malaysia boasts well-developed infrastructure, including advanced manufacturing facilities, reliable utilities, and efficient logistics systems. This infrastructure supports high-tech industries and ensures seamless operations.

Major investments in Malaysia’s semiconductor sector recently include expansions by the U.S.-based Intel and Germany’s Infineon, and AI infrastructure development by Nvidia and Microsoft, according to the authorities. The main reason for those multinational corporations giants like Intel, Infineon, and AMD, which already have a presence in Malaysia, may expand their operations to leverage the country's advantages.

Malaysia's emergence as a hotspot for semiconductor firms is driven by strategic advantages such as its geographic location, robust infrastructure, and government support. Controlling about 13% of global chip packaging, assembly, and testing services, Malaysia stands as the world's sixth-largest exporter of semiconductors. Prime Minister Anwar Ibrahim's recent announcement of a 25 billion ringgit investment to train 60,000 local engineers underscores the nation's commitment to expanding its semiconductor industry amid U.S.-China tensions.

The country's appeal is further bolstered by its well-developed infrastructure and strategic trade position, making it an attractive destination for major semiconductor firms like Intel, Infineon, and AMD. Local companies such as Inari Amertron, ViTrox Corporation, and Malaysian Pacific Industries, along with related industries, are poised to benefit significantly from increased investments and demand.

Overall, Malaysia's strategic initiatives and investments position it as a neutral, global chip-making hub, driving economic growth and technological advancement while reinforcing its critical role in the global semiconductor supply chain.